See other bills
under the
same topic
PRINTER'S NO. 2003
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1649
Session of
2025
INTRODUCED BY FINK, STAATS, BARGER, ZIMMERMAN, ROAE, COOK,
ANDERSON AND RYNCAVAGE, JUNE 24, 2025
REFERRED TO COMMITTEE ON FINANCE, JUNE 24, 2025
AN ACT
Amending Titles 53 (Municipalities Generally) and 72 (Taxation
and Fiscal Affairs) of the Pennsylvania Consolidated
Statutes, eliminating school district property taxes;
imposing county and school district taxes; establishing the
School District Emergency Fund and the School District
Property Tax Elimination Fund; consolidating Articles II and
III of the Tax Reform Code of 1971; in preliminary provisions
relating to sales and use tax, providing for definitions; in
taxation generally relating to sales and use tax, providing
for exclusions and for transfer to county sales and use tax
accounts; in preliminary provisions relating to personal
income tax, providing for definitions; and making repeals.
This act may be referred to as the School Property Tax
Elimination Act.
The General Assembly finds and declares as follows:
(1) School district property taxes are a fixed expense
for property owners, which creates an unsustainable and
regressive system of taxation impacting our fundamental
rights of life, liberty and property. School district
property taxes are not reflective of a property owner's
ability to pay and are regressive in nature.
(2) The current rate of increase of school district
property taxes is unsustainable due to factors frequently
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beyond the control of local school officials and school
boards, including underfunded pensions, rapidly escalating
health care costs, more complex educational requirements for
students and unfunded mandates.
(3) School district property taxes impact individuals
differently. For example, if spouses are retired and one
spouse passes away, the income reduction caused by the death
is immediate, but the school district property tax burden
remains unchanged. Other factors impacting older
Pennsylvanians' ability to bear the burden of school district
property taxes include the amount of financial assets in
retirement, health, mobility and the proximity of family
members. School district property taxes are problematic for
working families as well, with young working families bearing
the brunt of funding the State while managing such financial
burdens as income taxes, exploding health care coverage costs
and day care expenses.
(4) This Commonwealth faces an additional risk through
its tax structure and limited job creation, as young working
families continue to relocate from this Commonwealth, partly
as a result of Pennsylvania's tax system being specifically
geared to taxation of income from working citizens, with
retirement income not being taxed.
(5) The Independent Fiscal Office reports that
Pennsylvania is attracting more seniors as residents because
of the tax status in this Commonwealth of retirement income,
particularly when compared to neighboring states.
(6) The demographic changes to this Commonwealth, fueled
by the combination of the exodus of younger people from this
Commonwealth and the migration of older people into this
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Commonwealth, have precipitated a growing financial crisis.
(7) School districts are fixed cost-intensive operations
and seek stability in funding through property taxes, but the
predictability and certainty of school district property
taxes create contradictory impacts on property owners in
meeting their tax obligations.
(8) School district property tax reform must be
accomplished in an equitable manner in the form of the total
elimination of school district property taxes for residential
and commercial properties. Businesses in this Commonwealth
alone cannot and should not bear the financial burden caused
by the elimination of school district property taxes on
residential property only. (See 53 Pa.C.S. § 9011(a).)
(9) School district property tax reform must also
include rental properties, whereby each landlord must reduce
rental payments required of each residential or commercial
tenant in an amount equal to the reduction of taxes on real
property attributable to a tenant's unit. (See 53 Pa.C.S. §
9017.)
(10) This act provides for the elimination of school
district property taxes through the following:
(i) An increase in the sales, use and occupancy
taxes, whereby a new or additional 2% tax shall be
imposed on certain items and that money distributed to
each county of this Commonwealth, which shall disburse
money to school districts within the county from the
School District Property Tax Elimination Fund. (See 53
Pa.C.S. Ch. 90A Subchs. C and F.) For this purpose,
certain exclusions from taxation are eliminated,
including certain clothing, candy and gum. (See 53
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Pa.C.S. § 90A22(b.1).)
(ii) The imposition by each school district of a
local tax on the personal income of resident taxpayers of
the school district up to a maximum rate of 1.88%, the
revenue from which shall be collected by and be solely
for the use of school districts. (See 53 Pa.C.S. Ch. 90A
Subch. D.) For this purpose, compensation is expanded to
include taxation of old age or retirement benefits, with
the exception of Social Security benefits and other
similar types of benefits enumerated under the definition
of "compensation." (See the definition of "compensation"
in 72 Pa.C.S. § 2102, which effectuates these changes.)
(11) This act is not intended to reduce expenditures
made to school districts in this Commonwealth. The purpose of
this act is to shift a source of local school district
funding away from school district property taxes in a manner
that does not negatively impact school districts.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 53 of the Pennsylvania Consolidated
Statutes is amended by adding chapters to read:
CHAPTER 90
SCHOOL DISTRICT PROPERTY TAX ELIMINATION
Subchapter
A. Preliminary Provisions
B. Administration
SUBCHAPTER A
PRELIMINARY PROVISIONS
Sec.
9001. Scope of chapter.
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9002. Definitions.
§ 9001. Scope of chapter.
This chapter relates to school district property tax
elimination.
§ 9002. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Base year." The first fiscal year of a school district
beginning after June 30, 2027.
"Board." The School District Property Tax Elimination
Appeals Board.
"Department." The Department of Education of the
Commonwealth.
"Earned income tax." A tax on earned income and net profits
levied under:
(1) the act of June 27, 2006 (1st Sp.Sess., P.L.1873,
No.1), known as the Taxpayer Relief Act; or
(2) the act of October 15, 2008 (P.L.1615, No.130).
"Emergency fund." The School District Emergency Fund
established under section 9013 (relating to School District
Emergency Fund).
"Fund." The School District Property Tax Elimination Fund
established under section 90A51 (relating to School District
Property Tax Elimination Fund).
"Secretary." The Secretary of Education of the Commonwealth.
SUBCHAPTER B
ADMINISTRATION
Sec.
9011. Prohibition.
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9012. School District Property Tax Elimination Appeals Board.
9013. School District Emergency Fund.
9014. Supplemental funding.
9015. Excess money.
9016. Effect on basic education funding allocation.
9017. Rent reductions.
9018. Training.
§ 9011. Prohibition.
(a) General rule.--Except as provided in subsection (b), for
the first fiscal year of a school district beginning after
December 31, 2029, and each fiscal year of the school district
thereafter, the school district may not levy, assess or collect
real property taxes.
(b) Exception.--Subsection (a) shall not apply to the
collection of delinquent taxes.
(c) Penalty.--During any attempt after the prohibition under
subsection (a), by a school district to reinstate real property
taxes or levy against real property, the school district may
not:
(1) Receive any future disbursements through the fund.
(2) Impose a personal income tax under Subchapter D of
Chapter 90A (relating to personal income tax).
§ 9012. School District Property Tax Elimination Appeals Board.
(a) Establishment.--The School District Property Tax
Elimination Appeals Board is established.
(b) Composition.--The board shall consist of the following
members:
(1) Two representatives of the department, to be
appointed by the secretary.
(2) A representative of the Pennsylvania State Education
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Association, to be appointed by the secretary.
(3) A representative of the Pennsylvania Association of
School Business Officials, to be appointed by the secretary.
(4) A representative of the Pennsylvania School Boards
Association, to be appointed by the secretary.
(5) An individual appointed by the President pro tempore
of the Senate.
(6) An individual appointed by the Speaker of the House
of Representatives.
(7) An individual appointed by the Majority Leader of
the Senate.
(8) An individual appointed by the Majority Leader of
the House of Representatives.
(9) An individual appointed by the Minority Leader of
the Senate.
(10) An individual appointed by the Minority Leader of
the House of Representatives.
(c) Chairperson.--The secretary shall appoint a chairperson
of the board, who shall be one of the representatives of the
department.
(d) Compensation.--Members of the board shall not be
entitled to compensation for their services as members but shall
be entitled to reimbursement for actual and necessary travel
expenses.
(e) Vacancies.--A vacancy on the board shall be filled in
the same manner as the original appointment.
(f) Quorum.--A majority of the appointed members of the
board shall constitute a quorum. Action may be taken by the
board at a meeting upon a vote of a quorum of its members
present in person or through electronic means.
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(g) Meetings.--
(1) The board shall hold the board's first meeting
within 30 days of the effective date of this section.
(2) The board shall meet at the call of the chairperson
or as otherwise provided by the board.
(3) Meetings of the board shall be subject to the
requirements of 65 Pa.C.S. Ch. 7 (relating to open meetings).
(h) Administrative support.--The department shall provide
administrative support, meeting space, data, research and any
other assistance or information required by the board to carry
out the board's duties.
(i) Duties.--The board shall:
(1) Provide information to counties and school districts
regarding the use of the fund and the requirements under this
chapter.
(2) During the base year and the first three fiscal
years immediately following the base year, periodically
evaluate the finances of each school district in this
Commonwealth to determine whether the school district is
negatively impacted as a result of the elimination of school
district property taxes and the replacement of that revenue
through disbursements from the fund.
(3) Make a determination as to a request for
supplemental funding under section 9014 (relating to
supplemental funding).
§ 9013. School District Emergency Fund.
(a) Establishment.--The School District Emergency Fund is
established as a separate fund in the State Treasury.
(b) Purpose.--The emergency fund shall be used to make
disbursements at a time and in a manner determined by the board
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in accordance with section 9014 (relating to supplemental
funding).
(c) Funding.--
(1) The sum of $500,000,000 is appropriated from the
General Fund to the emergency fund for the fiscal years July
1, 2027, to June 30, 2029. The appropriation shall be a
continuing appropriation and shall not lapse. The
appropriation shall be allocated as follows:
(i) For fiscal year 2027-2028, $250,000,000.
(ii) For fiscal year 2028-2029, $250,000,000.
(2) For fiscal year 2029-2030, and each fiscal year
thereafter, the department shall transfer the amount remitted
under subsection (d) to the emergency fund. A school district
may not receive supplemental funding under section 9014 in an
amount in excess of the amount contained in the school
district's segregated account under subsection (d)(3) plus
any funds remaining from the appropriations under paragraph
(1).
(d) Remittance.--
(1) By August 1, 2029, and each August 1 thereafter,
each school district shall submit one quarter of 1% of the
school district's budget for that school year to the
department.
(2) By September 1, 2029, and each September 1
thereafter, the department shall transfer the amount remitted
under paragraph (1) to the emergency fund.
(3) The amount transferred under paragraph (2) shall be
segregated in the emergency fund by accounts for each
separate school district.
§ 9014. Supplemental funding.
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(a) Application.--
(1) A school district that is negatively impacted as a
result of the elimination of school district property taxes
and the replacement of that revenue through disbursements
from the fund may apply to the board for special
consideration of additional supplemental funding to the
school district because the school district faces unforeseen
or exigent financial circumstances.
(2) The request for supplemental funding shall specify
the reasons and amount of the request, along with any course
of action that may mitigate the request.
(b) Review and determination.--The board shall, in a timely
manner, review the application under subsection (a) and
determine the amount of supplemental funding to be received by
the school district from the emergency fund.
(c) Absence of reciprocity agreement.--Upon application
under subsection (a), money in the General Fund shall be paid to
the school district to offset a revenue loss to the school
district due to the absence of an income tax reciprocity
agreement between the Commonwealth and another state. The board
shall determine the amount of the payment based on the amount of
residential real property tax levied and assessed by the school
district in the base year.
(d) Notice.--The board shall notify the school district in
writing of its determination.
§ 9015. Excess money.
If, as a result of the disbursements made through the fund, a
school district receives more money during a fiscal year than
the amount under the school district budget approved by the
school district's board of school directors for that fiscal
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year, the school district shall reduce the earned income tax
imposed by the school district or reduce any indebtedness of the
school district by the difference between the amount of the fund
disbursements and the amount under the school district budget.
§ 9016. Effect on basic education funding allocation.
This chapter is not intended to alter the basic education
funding allocation.
§ 9017. Rent reductions.
(a) Amount of reduction.--Each landlord shall reduce rental
payments required of each residential or commercial tenant in an
amount equal to the reduction of taxes on real property
attributable to the tenant's unit unless the landlord can
confirm by a written disclosure that prior property tax
increases over the past five years were not passed to each
tenant. The amount of tax reduction attributable to each unit
shall be based upon allocated square footage occupied or other
reasonable criteria. The rental amount specified in a lease
shall reflect any reduction in real property taxes under this
chapter.
(b) Calculation.-- The rental reduction per rental payment
shall be calculated by dividing the total real property tax
reduction applicable to the real property leased by the tenant
by the number of payments required of the tenant during that tax
year. In cases where more than one rental unit is situated upon
a tract of real estate affected by the tax reduction, the
landlord shall reduce the rent of each tenant in a proportion
equal to the total amount of rent that the rental unit leased by
the tenant bears to the total amount of rent of all rental units
situated upon the tract of real estate.
(c) Time of reduction.--A landlord shall reduce the rental
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payments required of each tenant commencing with the first date
on which the tenant is required to pay rent subsequent to the
effective date of the elimination of the school real property
tax and ending on the last date the tenant is required to pay
rent under the lease. If a lease is on a month-to-month basis,
rental payments shall only be reduced for the first month during
which the tenant is required to pay rent subsequent to the
effective date of the elimination of the school real property
tax.
(d) Applicability.--This section shall apply to leases
entered into before, on or after the effective date of this
section.
(e) Taxability.--A reduction in rent provided under this
section shall not be taxable.
§ 9018. Training.
The following may provide training regarding budget and
financial management for school district officials as a result
of the implementation of the fund:
(1) The board.
(2) An institution of higher education, as defined in
section 118(c) of the act of March 10, 1949 (P.L.30, No.14),
known as the Public School Code of 1949, that has expertise
in financial management, budgeting, treasury operations and
forecasting.
CHAPTER 90A
COUNTY AND SCHOOL DISTRICT TAXES
Subchapter
A. Preliminary Provisions
B. Subjects of Taxation
C. Sales and Use Tax
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D. Personal Income Tax
E. Credits and Exemptions
F. Disbursement
SUBCHAPTER A
PRELIMINARY PROVISIONS
Sec.
90A01. Scope of chapter.
90A02. Definitions.
90A03. Scope and limitations.
§ 90A01. Scope of chapter.
This chapter relates to county tax imposition.
§ 90A02. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Base year." As defined in section 9002 (relating to
definitions).
"Board of county commissioners." Includes the successor in
function to the board of county commissioners in a county which
has adopted a home rule charter under the former act of April
13, 1972 (P.L.184, No.62), known as the Home Rule Charter and
Optional Plans Law, or under Subpart E of Part III (relating to
home rule and optional plan government).
"County." A county-level municipality within this
Commonwealth, regardless of classification. The term includes a
county which has adopted a home rule charter or optional plan of
government under the former Home Rule Charter and Optional Plans
Law or under Subpart E of Part III.
"County sales and use tax account." The separate account
established in the fund for each county under section 90A52(b)
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(relating to payments to counties).
"Current year." The calendar year or fiscal year for which
the tax is levied.
"Department." The Department of Revenue of the Commonwealth.
"Domicile." As defined in section 501 of the Local Tax
Enabling Act.
"Fund." The School District Property Tax Elimination Fund
established under section 90A51 (relating to School District
Property Tax Elimination Fund).
"Governing body." The board of county commissioners,
including the successor in function to the board of county
commissioners in a county which has adopted a home rule charter
under the former Home Rule Charter and Optional Plans Law or
under Subpart E of Part III.
"Individual." As defined in 72 Pa.C.S. § 2102 (relating to
definitions).
"Local Tax Enabling Act." The act of December 31, 1965
(P.L.1257, No.511), known as The Local Tax Enabling Act.
"Ordinance." Includes a resolution.
"Personal income." Income enumerated in 72 Pa.C.S. § 2203
(relating to classes of income) as returned to and ascertained
by the department, subject, however, to any correction thereof
for fraud, evasion or error as finally ascertained by the
Commonwealth.
"Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
known as the Tax Reform Code of 1971.
"Taxpayer." An individual required under this chapter to
file a tax return or to pay a tax.
§ 90A03. Scope and limitations.
It is the intent of this chapter to require each county and
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school district to levy, assess and collect taxes.
SUBCHAPTER B
SUBJECTS OF TAXATION
Sec.
90A11. General tax authorization.
90A12. Continuity of tax.
§ 90A11. General tax authorization.
(a) County.--Each county shall by ordinance levy, assess and
collect or provide for the levying, assessment and collection of
taxes on the subjects specified under this chapter within the
geographical limits of the county.
(b) School district.--Each school district shall by
resolution levy, assess and collect or provide for the levying,
assessment and collection of taxes on the subjects specified
under this chapter within the geographical limits of the school
district.
(c) Local Tax Enabling Act.--
(1) Nothing under section 305 of the Local Tax Enabling
Act shall be construed to require the vacation of an
ordinance or resolution passed under the authority of Chapter
3 of the Local Tax Enabling Act as a result of the assessment
and collection of taxes on the subjects specified under this
chapter.
(2) The assessment and collection of taxes on the
subjects specified under this chapter shall not apply to the
provisions of section 311 of the Local Tax Enabling Act.
(3) The calculation of the aggregate amount of taxes
under section 320 of the Local Tax Enabling Act shall not
include any re venues derived from the assessment and
collection of taxes on the subjects specified under this
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chapter .
§ 90A12. Continuity of tax.
Each tax levied under this chapter shall continue in force on
a calendar or fiscal year basis, as the case may be, without
annual reenactment unless the rate of tax is increased or the
tax is subsequently repealed.
SUBCHAPTER C
SALES AND USE TAX
Sec.
90A21. Construction.
90A22. Imposition.
90A23. Situs.
90A24. Licenses.
90A25. Rules and regulations and collection costs.
90A26. Procedure and administration.
§ 90A21. Construction.
The tax imposed by the governing body under this subchapter
shall be in addition to any tax imposed by the Commonwealth
under 72 Pa.C.S. Pt. II Subpt. A (relating to sales and use
tax). Except for the differing situs provisions under section
90A23 (relating to situs), the provisions of 72 Pa.C.S. Pt. II
Subpt. A shall apply to the tax.
§ 90A22. Imposition.
(a) Sales.--Each governing body shall, beginning October 1,
2029, levy and assess on each separate sale at retail of
tangible personal property or services, as defined in 72 Pa.C.S.
§ 1102 (relating to definitions), within the boundaries of the
county, a tax on the purchase price. The tax shall be collected
by the vendor from the purchaser and shall be paid over to the
Commonwealth.
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(b) Use.--Each governing body shall, beginning October 1,
2029, levy and assess a tax on the use, within the county, of
tangible personal property purchased at retail and on services
purchased at retail, as defined in 72 Pa.C.S. § 1102, on the
purchase price. The tax shall be paid over to the Commonwealth
by the person who makes the use. The use tax imposed under this
subchapter shall not be paid over to the Commonwealth by any
person who has paid the tax imposed under:
(1) Subsection (a).
(2) This subsection to the vendor with respect to the
use.
(b.1) Subjects of taxation.--Notwithstanding any exclusion
from sales and use tax under 72 Pa.C.S. Pt. II Subpt. A
(relating to sales and use tax), the tax under subsections (a)
and (b) may be imposed on the following:
(1) T he sale at retail or use of clothing and other
related items, as specified in 72 Pa.C.S. § 1321(17)(ii)
(relating to exclusions), except t he sale at retail or use of
used clothing, if the clothing is sold by an institution or
organization that has received a determination of exception
from the Internal Revenue Service under section 501(c)(3) of
the Internal Revenue Code of 1986, as amended (26 U.S.C. §
501(c)(3)). The following apply:
(i) The exemption granted under this paragraph shall
be limited to institutions or organizations that are not
organized or operated for profit, and no part of the net
earnings of which inures to the benefit of any private
shareholder or individual.
(ii) No institution or organization shall be exempt
under this paragraph, unless the institution or
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organization shall have issued to it by the department an
exemption certificate declaring that the institution or
organization is entitled to the exemption provided for by
this paragraph.
(iii) All proceeds from sales exempted under this
paragraph must be for section 501(c)(3) purposes.
(2) The sale at retail or use of candy or gum, as
specified in 72 Pa.C.S. § 1321(40).
(c) Occupancy.--In any county within which a tax authorized
by subsection (a) is imposed, there shall be levied, assessed
and collected an excise tax on the rent on each occupancy of a
room in a hotel in the county. The tax shall be collected by the
operator or owner from the occupant and paid over to the
Commonwealth.
(d) Rate and uniformity.--
(1) The tax under subsections (a), (b) and (c) shall be
imposed at a rate of 2%.
(2) The tax imposed by subsections (a), (b) and (c)
shall be uniform.
(e) Computation.--The tax imposed under this section shall
be computed in the same manner under section 503(e)(2) of the
act of June 5, 1991 (P.L.9, No.6), known as the Pennsylvania
Intergovernmental Cooperation Authority Act for Cities of the
First Class.
(f) Deposit.--Taxes collected under this section shall be
deposited into the fund.
§ 90A23. Situs.
(a) General rule.--Except as provided under subsections (b)
and (c), the situs of sales at retail or uses, including leases,
of motor vehicles, aircraft, motorcraft and utility services
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shall be determined in the manner specified by section 504 of
the act of June 5, 1991 (P.L.9, No.6), known as the Pennsylvania
Intergovernmental Cooperation Authority Act for Cities of the
First Class, and 72 Pa.C.S. Pt. II Subpt. A (relating to sales
and use tax).
(b) Premium cable services.--The sale or use of premium
cable service shall be deemed to occur at the service address in
the county which is the address where the customer cable
connection is located. This subsection shall determine the situs
of premium cable service for the purpose of all local sales
taxes, including those imposed under Chapter 5 of the
Pennsylvania Intergovernmental Cooperation Authority Act for
Cities of the First Class and under Subdivision (e) of Article
XXXI-B of the act of July 28, 1953 (P.L.723, No.230), known as
the Second Class County Code.
(c) Telecommunications service.--The situs of
telecommunications service under this chapter shall be
determined in accordance with regulations adopted by the
department, which shall be uniform among all counties, and shall
be consistent with regulations promulgated under Subdivision (e)
of Article XXXI-B of the Second Class County Code, 72 Pa.C.S.
Pt. II Subpt. A and Chapter 5 of the Pennsylvania
Intergovernmental Cooperation Authority Act for Cities of the
First Class.
§ 90A24. Licenses.
A license for the collection of the tax imposed by this
subchapter shall be issued in the same manner as is provided for
in section 505 of the act of June 5, 1991 (P.L.9, No.6), known
as the Pennsylvania Intergovernmental Cooperation Authority Act
for Cities of the First Class. Licensees shall be entitled to
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the same discount as provided in 72 Pa.C.S. § 1526 (relating to
discount).
§ 90A25. Rules and regulations and collection costs.
(a) Rules and regulations.--Rules and regulations shall be
applicable to the taxes imposed under section 90A23 (relating to
situs) in the same manner as is provided under section 506(1)
and (2) of the act of June 5, 1991 (P.L.9, No.6), known as the
Pennsylvania Intergovernmental Cooperation Authority Act for
Cities of the First Class.
(b) Administrative costs.--The department, to cover its
costs of administration under this subchapter, shall be entitled
to retain a sum equal to the costs of administration. When the
annual operating budget for the department is submitted to the
General Assembly, the department shall also submit to the
chairperson and minority chairperson of the Appropriations
Committee of the Senate and to the chairperson and minority
chairperson of the Appropriations Committee of the House of
Representatives a report of the actual sums retained for costs
of collection in the preceding fiscal year, together with all
supporting details.
§ 90A26. Procedure and administration.
Prior to adopting an ordinance imposing a tax under this
chapter, the governing body shall give public notice of its duty
to adopt the ordinance in the manner provided by section 306 of
the Local Tax Enabling Act.
SUBCHAPTER D
PERSONAL INCOME TAX
Sec.
90A31. Construction.
90A32. Local personal income tax.
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90A33. Collections.
90A34. Rules and regulations.
90A35. Procedure and administration.
§ 90A31. Construction.
The tax imposed by the school district under this subchapter
shall be in addition to any tax imposed by the Commonwealth
under 72 Pa.C.S. Pt. II Subpt. B (relating to personal income
tax). Except for the differing provisions under sections 90A41
(relating to credits), 90A42 (relating to low-income tax
provisions) and 90A43 (relating to regulations), the provisions
of 72 Pa.C.S. Pt. II Subpt. B shall apply to the tax.
§ 90A32. Local personal income tax.
Each school district shall adopt a resolution to, beginning
October 1, 2029, levy, assess and collect a local tax on the
personal income of resident taxpayers of the school district up
to a maximum rate of 1.88%.
§ 90A33. Collections.
Each school district imposing a tax under section 90A32
(relating to local personal income tax) shall designate the tax
officer who is appointed under section 507 of the Local Tax
Enabling Act, or otherwise by law, as the collector of the tax.
In the performance of the tax collection duties under this
subchapter, the designated tax officer shall have all the same
powers, rights, responsibilities and duties for the collection
of the taxes which may be imposed under the Local Tax Enabling
Act or as otherwise provided by law.
§ 90A34. Rules and regulations.
Taxes imposed under section 90A32 (relating to local personal
income tax) shall be subject to the rules and regulations
adopted by the department under Article III of the Tax Reform
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Code.
§ 90A35. Procedure and administration.
Prior to adopting the resolution imposing the tax under
section 90A32 (relating to local personal income tax), the
school district shall give public notice of its duty to adopt
the resolution in the manner provided by section 306 of the
Local Tax Enabling Act.
SUBCHAPTER E
CREDITS AND EXEMPTIONS
Sec.
90A41. Credits.
90A42. Low-income tax provisions.
90A43. Regulations.
§ 90A41. Credits.
The provisions of section 317 of the Local Tax Enabling Act
shall be used to determine any credits under the provisions of
this chapter for any taxes imposed under section 90A32 (relating
to local personal income tax) on the earned income portion of
the personal income tax.
§ 90A42. Low-income tax provisions.
The provisions of 72 Pa.C.S. § 2204 (relating to special tax
provisions for poverty) shall be applied by each school district
which levies a tax under section 90A32 (relating to local
personal income tax.
§ 90A43. Regulations.
Each school district may adopt regulations for the processing
of claims under this subchapter.
SUBCHAPTER F
DISBURSEMENT
Sec.
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90A51. School District Property Tax Elimination Fund.
90A52. Payments to counties.
90A53. Payments by counties.
§ 90A51. School District Property Tax Elimination Fund.
(a) Establishment.--The School District Property Tax
Elimination Fund is established as a separate fund in the State
Treasury.
(b) Purpose.--The fund shall be used to make disbursements
at a time and in a manner determined by the Department of
Education in consultation with the department and in accordance
with Chapter 90 (relating to school district property tax
elimination) for the purpose of eliminating school district
property taxes.
(c) Sources.--The following shall be deposited into the
fund:
(1) Money deposited under section 90A22(f) (relating to
imposition).
(2) Money appropriated or transferred to the fund.
(3) Return on money in the fund.
(4) Grants, gifts, donations and other payments from a
person or governmental entity to the fund.
§ 90A52. Payments to counties.
(a) Initial amounts.--During the first three fiscal years
immediately following the base year, the State Treasurer shall
make distributions to each county, on behalf of school districts
within the county, from the fund in an amount equivalent to the
total real property tax revenues collected by the school
districts during the base year, without regard to the amount of
money contained in the fund at the time of the distributions.
The General Assembly shall appropriate as much money as
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necessary to allow the fund to remain solvent to make the
distributions.
(b) County accounts.--For each county the (proper name)
County Sales and Use Tax Account is established as a separate
account within the fund.
(c) Subsequent amounts.--For the fourth fiscal year
immediately following the base year, and each fiscal year
thereafter, the following apply:
(1) Taxes imposed under section 90A22 (relating to
imposition) shall be received by the department and paid to
the State Treasurer and, along with interest and penalties,
less any collection costs allowed under this chapter and any
refunds and credits paid, shall be credited, based on the
situs of the sales at retail or uses, to the respective
county sales and use tax accounts. Money shall be credited to
the county sales and use tax accounts not less frequently
than every two weeks.
(2) Money in the county sales and use tax accounts shall
not lapse or be transferred to any other fund, but shall
remain in the county sales and use tax accounts. Pending
their disbursement, money received on behalf of or deposited
into the county sales and use tax accounts shall be invested
or reinvested as is other money in the custody of the State
Treasurer in the manner provided by law. All earnings
received from the investment or reinvestment of the money
shall be credited to the respective county sales and use tax
accounts.
(3) The State Treasurer shall make periodic
disbursements to each county, on behalf of school districts
within the county, out of the money contained in the county's
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sales and use tax account.
§ 90A53. Payments by counties.
Each county shall distribute to each school district a
portion of the total disbursement to school districts which is
equal to the total disbursement to school districts multiplied
by the ratio of average daily membership of the school district
divided by the sum of the average daily membership of all school
districts in the county. For the purposes of this section, the
term "average daily membership" shall mean "average daily
membership" as defined by the act of March 10, 1949 (P.L.30,
No.14), known as the Public School Code of 1949. For school
districts located in more than one county, the average daily
membership shall be multiplied by a factor calculated by
dividing the square mileage of the school district located in
the county by the total square mileage of the school district.
Section 2. Title 72 is amended by adding parts to read:
PART I
PRELIMINARY PROVISIONS
Chapter
1. General Provisions
CHAPTER 1
GENERAL PROVISIONS
Sec.
101. Scope of title.
102. Definitions.
§ 101. Scope of title.
This title relates to taxation and fiscal affairs.
§ 102. Definitions.
Subject to additional definitions contained in subsequent
provisions of this title which are applicable to specific
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provisions under this title, the following words and phrases
when used in this title shall have the meanings given to them in
this section unless the context clearly indicates otherwise:
"Department." The Department of Revenue of the Commonwealth.
"Fiscal Code." The act of April 9, 1929 (P.L.343, No.176),
known as The Fiscal Code.
"Internal Revenue Code of 1954." The Internal Revenue Code
of 1954 (68A Stat. 3).
"Internal Revenue Code of 1986." The Internal Revenue Code
of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).
"Liquor Code." The act of April 12, 1951 (P.L.90, No.21),
known as the Liquor Code.
"Mobile Telecommunications Sourcing Act." The Mobile
Telecommunications Sourcing Act (Public Law 106-252, 114 Stat.
626).
"Secretary." The Secretary of Revenue of the Commonwealth.
"Tax Reform Code of 1971." The act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971.
PART II
STATE TAX PROVISIONS
Subpart
A. Sales and Use Tax
B. Personal Income Tax
SUBPART A
SALES AND USE TAX
Chapter
11. Preliminary Provisions
13. Taxation Generally
15. Procedure and Administration
CHAPTER 11
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PRELIMINARY PROVISIONS
Sec.
1101. Scope of subpart.
1102. Definitions.
§ 1101. Scope of subpart.
This subpart relates to sales and use tax.
§ 1102. Definitions.
The following words and phrases when used in this subpart
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Adjustment services, collection services or credit reporting
services." As follows:
(1) A service providing collection or adjustments of
accounts receivable or mercantile or consumer credit
reporting, including, but not limited to, services provided
by an adjustment bureau or collection agency, a consumer or
mercantile credit reporting bureau, a credit bureau or
agency, a credit clearinghouse or a credit investigation
service.
(2) The term shall not include any of the following:
(i) Providing credit card service with collection by
a central agency.
(ii) Providing debt counseling or adjustment
services to individuals.
(iii) Billing or collection services provided by a
local exchange telephone company.
"Affiliated person." A person that, with respect to another
person:
(1) has a direct or indirect ownership interest of more
than 5% in the other person; or
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(2) is related to the other person because a third
person, or group of third persons who are affiliated with
each other as defined in this definition, holds a direct or
indirect ownership interest of more than 5% in the related
person.
"Animal housing facility." A roofed structure or facility,
or a portion of the facility, used for occupation by livestock
or poultry.
"Blasting." The use of a combustible or explosive
composition in the removal of material resources, minerals and
mineral aggregates from the earth, including the separation of
the dirt, waste and refuse in which they are found.
"Building machinery and equipment." As follows:
(1) Generation equipment, storage equipment,
conditioning equipment, distribution equipment and
termination equipment, limited to the following:
(i) Air conditioning, limited to heating, cooling,
purification, humidification, dehumidification and
ventilation.
(ii) Electrical.
(iii) Plumbing.
(iv) Communications limited to voice, video, data,
sound, master clock and noise abatement.
(v) Alarms, limited to fire, security and detection.
(vi) A control system, limited to energy management,
traffic and parking lot and building access.
(vii) A medical system, limited to diagnosis and
treatment equipment, medical gas, nurse call and doctor
paging.
(viii) A laboratory system.
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(ix) A cathodic protection system.
(x) Furniture, cabinetry and kitchen equipment.
(2) The term shall include any of the following,
together with integral coverings and enclosures, whether the
item constitutes a fixture or is otherwise affixed to the
real estate, whether damage would be done to the item or its
surroundings upon removal or whether the item is physically
located within a real estate structure:
(i) Boilers.
(ii) Chillers.
(iii) Air cleaners.
(iv) Humidifiers.
(v) Fans.
(vi) Switchgear.
(vii) Pumps.
(viii) Telephones.
(ix) Speakers.
(x) Horns.
(xi) Motion detectors.
(xii) Dampers.
(xiii) Actuators.
(xiv) Grills.
(xv) Registers.
(xvi) Traffic signals.
(xvii) Sensors.
(xviii) Card access devices.
(xix) Guardrails.
(xx) Medial devices.
(xxi) Floor troughs.
(xxii) Grates.
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(xxiii) Laundry equipment.
(3) The term shall not include any of the following:
(i) Guardrail posts.
(ii) Pipes.
(iii) Fittings.
(iv) Pipe supports and hangers.
(v) Valves.
(vi) Underground tanks.
(vii) Wire.
(viii) Conduit.
(ix) Receptacle and junction boxes.
(x) Insulation.
(xi) Ductwork.
(xii) Coverings.
"Building maintenance or cleaning services." As follows:
(1) Providing services, including any of the following:
(i) Janitorial, maid or housekeeping service.
(ii) Office or interior building cleaning or
maintenance.
(iii) Window cleaning.
(iv) Floor waxing.
(v) Lighting maintenance such as bulb replacement.
(vi) Cleaning.
(vii) Chimney cleaning.
(viii) Acoustical tile cleaning.
(ix) Venetian blind cleaning.
(x) Cleaning and maintenance of telephone booths.
(xi) Cleaning and degreasing of service stations.
(2) The term shall not include any of the following:
(i) Repairs on buildings and other structures.
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(ii) Maintenance or repair of boilers, furnaces and
residential air conditioning equipment or parts of
boilers, furnaces and residential air conditioning
equipment.
(iii) Painting, wallpapering or applying other
coverings to interior walls, ceilings or floors.
(iv) Exterior painting of buildings.
"Car-sharing program agreement." The terms and conditions
that govern the use of a shared vehicle through a peer-to-peer
car-sharing program.
"Commercial aircraft operator." A person, excluding a
scheduled airline, engaging in any or all of the following:
(1) Aircraft charters.
(2) Aircraft leasing.
(3) Aircraft sales.
(4) Aircraft rental.
(5) Flight instruction.
(6) Air freight.
(7) Other flight activities for compensation.
"Commercial racing activities." Any of the following:
(1) Thoroughbred and harness racing at which pari-mutuel
wagering is conducted under 3 Pa.C.S. Ch. 93 (relating to
race horse industry reform).
(2) Fair racing sanctioned by the State Harness Racing
Commission.
"Construction contract." As follows:
(1) A written or oral contract or agreement for the
construction, reconstruction, remodeling, renovation or
repair of real estate or a real estate structure.
(2) The term shall not apply to services which are
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taxable under any of the following:
(i) Paragraph (1)(ix) or (xi) of the definition of
"sale at retail."
(ii) Paragraph (1)(vi) or (viii) of the definition
of "use."
"Construction contractor." A person who performs an activity
under a construction contract, including a subcontractor.
"Disinfecting or pest control services." As follows:
(1) A service providing disinfecting, termite control,
insect control, rodent control or other pest control
services, including deodorant servicing of restrooms,
washroom sanitation service, restroom cleaning service,
extermination service or fumigating service.
(2) As used in this definition:
(i) The term "fumigating service" shall not include
the fumigation of agricultural commodities or containers
used for agricultural commodities.
(ii) The term "insect control" shall not include the
spraying of trees which are harvested for commercial
purposes for gypsy moth control.
"Employment agency services." As follows:
(1) Providing employment services to a prospective
employer or employee other than employment services provided
by theatrical employment agencies and motion picture casting
bureaus.
(2) The term shall include services provided by
employment agencies, executive placement services and labor
contractor employment agencies other than farm labor.
"Flight simulator." A device used for the training or
instruction of an individual on a helicopter and similar
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rotorcraft.
"Forum." As follows:
(1) A place where sales at retail occur, whether
physical or electronic.
(2) The term shall include a store, booth, Internet
website, catalog or similar place.
"Gratuity." An amount paid or remitted for services
performed in conjunction with a sale of food or beverages or
hotel or motel accommodations when the amount is in excess of
the charges and the tax for the food, beverages or
accommodations, regardless of the method of billing or payment.
"Help supply services." As follows:
(1) Providing temporary or continuing help where the
help supplied is on the payroll of the supplying person or
entity, but is under the supervision of the individual or
business to which help is furnished.
(2) The term shall include service provided by any of
the following:
(i) Labor and manpower pools.
(ii) Employee leasing services.
(iii) Office help supply services.
(iv) Temporary help services.
(v) Usher services.
(vi) Modeling services.
(vii) Fashion show model supply services.
(3) The term shall not include services providing farm
labor or human health-related services, including nursing,
home health care and personal care. As used in this
paragraph, the term "personal care" shall include providing
at least one of the following types of assistance to persons
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with limited ability for self-care:
(i) Dressing, bathing or feeding.
(ii) Supervising self-administered medication.
(iii) Transferring a person to or from a bed or
wheelchair.
(iv) Routine housekeeping chores when provided in
conjunction with and supplied by the same provider of the
assistance listed in subparagraph (i), (ii) or (iii).
"Internet." The international nonproprietary computer
network of both Federal and non-Federal interoperable packet
switched data networks.
"Lawn care service." Providing services for lawn upkeep,
including fertilizing, lawn mowing, shrubbery trimming and other
lawn treatment services.
"Liquor." As defined in section 102 of the Liquor Code.
"Lobbying services." Providing the services of a lobbyist,
as that term is defined in 65 Pa.C.S. § 13A03 (relating to
definitions).
"Maintaining a place of business in this Commonwealth." As
follows:
(1) Any of the following:
(i) Having, maintaining or using within this
Commonwealth, either directly or through a subsidiary,
representative or agent, an office, distribution house,
sales house, warehouse, service enterprise or other place
of business. This subparagraph shall include an agent of
general or restricted authority or other representative,
regardless of whether the place of business,
representative or agent is located in this Commonwealth
permanently or temporarily or whether the person or
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subsidiary maintaining the place of business,
representative or agent is authorized to do business in
this Commonwealth.
(ii) Engaging in an activity as a business in this
Commonwealth by a person, either directly or through a
subsidiary, representative or an agent, in connection
with the lease, sale or delivery of tangible personal
property or the performance of services for use, storage
or consumption or in connection with the sale or delivery
for use of the services described under paragraph (1)
(vi), (vii), (viii), (ix), (x), (xi) or (xii) of the
definition of "sale at retail," including having,
maintaining or using an office, distribution house, sales
house, warehouse or other place of business, a stock of
goods or a solicitor, canvasser, salesman, representative
or agent under its authority, at its direction or with
its permission, regardless of whether the person or
subsidiary is authorized to do business in this
Commonwealth.
(iii) Regularly or substantially soliciting orders
within this Commonwealth in connection with the lease,
sale or delivery of tangible personal property or the
performance of services or in connection with the sale or
delivery of the services described under paragraph (1)
(vi), (vii), (viii), (ix), (x), (xi) or (xii) of the
definition of "sale at retail" for residents of this
Commonwealth by means of catalogs or other advertising,
whether the orders are accepted within or without this
Commonwealth.
(iv) Entering this Commonwealth to provide assembly,
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service or repair of tangible personal property, either
directly or through a subsidiary, representative or
agent.
(v) Delivering tangible personal property to
locations within this Commonwealth if the delivery shall
include the unpacking, positioning, placing or assembling
of the tangible personal property.
(vi) Having contact within this Commonwealth which
would allow the Commonwealth to require a person to
collect and remit tax under the Constitution of the
United States.
(vii) Providing a customer's mobile
telecommunications service deemed to be provided by the
customer's home service provider under the Mobile
Telecommunications Sourcing Act. For purposes of this
subparagraph, words and phrases used in this subparagraph
shall have the meanings given to them in the Mobile
Telecommunications Sourcing Act.
(viii) As follows:
(A) Engaging in an activity as a business by a
person, either directly or through a subsidiary,
representative or agent, in connection with the
lease, sale or delivery of tangible personal property
into this Commonwealth or the performance of services
for use, storage or consumption or in connection with
the sale or delivery for use in this Commonwealth of
at least $100,000 during the preceding 12-month
calendar period.
(B) For a marketplace facilitator, this activity
includes all sales, leases and deliveries of tangible
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personal property and all sales of services by the
marketplace seller whose sales are facilitated
through the marketplace facilitator's forum.
(C) For a peer-to-peer car-sharing program
marketplace facilitator, this activity includes all
sales, leases and deliveries of tangible personal
property and all sales of services by the marketplace
seller whose sales are facilitated through the peer-
to-peer car-sharing program.
(2) The term shall not include any of the following:
(i) Owning or leasing of tangible or intangible
property by a person who has contracted with an
unaffiliated commercial printer for printing if the
property is for use by the commercial printer and located
at the Pennsylvania premises of the commercial printer.
(ii) Visits by a person's employees or agents to the
premises in this Commonwealth of an unaffiliated
commercial printer with whom the person has contracted
for printing in connection with the contract.
"Malt or brewed beverages." As defined in section 102 of the
Liquor Code.
"Manufacture." As follows:
(1) The performance of manufacturing, fabricating,
compounding, processing or other operations engaged in as a
business, which place tangible personal property in a form,
composition or character different from that in which it is
acquired, whether for sale or use by the manufacturer.
(2) The term shall include any of the following:
(i) Every operation commencing with the first
production stage and ending with the completion of
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tangible personal property having the physical qualities,
including packaging which passes to the ultimate
consumer, the tangible personal property has when
transferred by the manufacturer to another. The following
apply:
(A) For purposes of this subparagraph, the term
"operation" shall include clean rooms and their
component systems, including any of the following:
(I) Environmental control systems.
(II) Antistatic vertical walls and
manufacturing platforms and floors, which are
independent of the real estate.
(III) Process piping systems.
(IV) Specialized lighting systems.
(V) Deionized water systems.
(VI) Process vacuum and compressed air
systems.
(VII) Process and specialty gases.
(VIII) Alarm or warning devices specifically
designed to warn of threats to the integrity of
the product or people.
(B) For purposes of clause (A), the term "clean
room" is a location with a self-contained, sealed
environment with a controlled, closed air system
independent from the facility's general environmental
control system.
(ii) The publishing and printing of books,
newspapers, magazines and other periodicals.
(iii) Refining, blasting, exploring, mining and
quarrying for, or otherwise extracting from the earth,
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from waste or stock piles, from pits or from banks,
natural resources, minerals and mineral aggregates,
including blast furnace slag.
(iv) Building, rebuilding, repairing and making
additions to or replacements in or upon vessels designed
for commercial use of registered tonnage of 50 tons or
more when produced upon special order of the purchaser,
or when rebuilt, repaired or enlarged, or when
replacements are made upon order of or for the account of
the owner.
(v) Research for the production of a new or improved
product or utility service or method of producing a
product or utility service, but not including market
research or research for the improvement of
administrative efficiency.
(vi) Remanufacture for wholesale distribution by a
remanufacturer of motor vehicle parts from used parts
acquired in bulk by the remanufacturer using an assembly
line process which involves the complete disassembly of
the parts and integration of the components of the parts
with other used or new components of parts, including the
salvaging, recycling or reclaiming of used parts by the
remanufacturer.
(vii) Remanufacture or retrofit by a manufacturer or
remanufacturer of aircraft, armored vehicles or other
defense-related vehicles having a finished value of at
least $50,000. Remanufacture or retrofit involves the
disassembly of the aircraft, vehicles, parts or
components, including electric or electronic components,
the integration of the parts and components with other
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used or new parts or components, including the salvaging,
recycling or reclaiming of the used parts or components
and the assembly of the new or used aircraft, vehicles,
parts or components. For purposes of this subparagraph,
the following words or phrases have the following
meanings:
(A) "Aircraft." A fixed-wing aircraft,
helicopter, powered aircraft, tilt-rotor or tilt-wing
aircraft, unmanned aircraft or glider.
(B) "Armored vehicles." A tank, armed personnel
carrier or other armed track or semitrack vehicle.
(C) "Other defense-related vehicles." A truck,
truck-tractor, trailer, jeep or other utility
vehicles, including an unmanned vehicle.
(viii) Remanufacture by a remanufacturer of
locomotive parts from used parts acquired in bulk by the
remanufacturer using an assembly line process which
involves the complete disassembly of the parts and
integration of the components of the parts with other
used or new components of parts, including the salvaging,
recycling or reclaiming of used parts by the
remanufacturer.
(3) The term shall not include any of the following:
(i) Constructing, altering, servicing, repairing or
improving real estate.
(ii) Repairing, servicing or installing tangible
personal property.
(iii) The producing of a commercial motion picture.
(iv) The cooking, freezing or baking of fruits,
vegetables, mushrooms, fish, seafood, meats, poultry or
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bakery products.
"Manufacturer of malt or brewed beverages." As defined in
section 102 of the Liquor Code.
"Marketplace facilitator." As follows:
(1) A person that facilitates the sale at retail of
tangible personal property.
(2) For purposes of this subpart, a person facilitates a
sale at retail if the person or an affiliated person:
(i) lists or advertises tangible personal property
for sale at retail in any forum; and
(ii) either directly or indirectly through
agreements or arrangements with third parties, collects
the payment from the purchaser and transmits the payment
to the person selling the property.
(3) The term includes a person that may also be a
vendor.
"Marketplace seller." A person that has an agreement with a
marketplace facilitator to facilitate sales for the person.
"Mobile telecommunications service." As defined in the
Mobile Telecommunications Sourcing Act.
"Peer-to-peer car sharing." The authorized use of a shared
vehicle by an individual, other than the owner of the vehicle,
through a peer-to-peer car-sharing program.
" Peer-to-peer car-sharing payment." Full consideration paid
or delivered, or promised to be paid or delivered, to the peer-
to-peer car-sharing marketplace facilitator under a car-sharing
program agreement, excluding charges for local sales or use tax,
State sales or use tax or public transportation assistance fund
fees.
"Peer-to-peer car-sharing program." A business platform
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that, through a peer-to-peer car-sharing marketplace, connects
shared vehicle owners with drivers to enable the sharing of
vehicles for financial consideration.
"Peer-to-peer car-sharing program marketplace." A forum on
which a shared vehicle is listed or advertised for peer-to-peer
car sharing.
"Peer-to-peer car-sharing program marketplace facilitator."
A person that facilitates peer-to-peer car sharing through a
peer -to-peer car-sharing marketplace and either directly or
indirectly, through agreements or arrangements with third
parties, collects the peer-to-peer car-sharing payment from the
purchaser and transmits the payment to the shared vehicle owner.
"Person." A natural person, association, fiduciary,
partnership, corporation or other entity, including the
Commonwealth of Pennsylvania, its political subdivisions and
instrumentalities and public authorities. When used in
prescribing and imposing a penalty, fine or imprisonment, or
both, the term, as applied to an association, shall include the
members of the association and, as applied to a corporation, the
officers of the corporation.
"Prebuilt housing." Either of the following:
(1) Manufactured housing, including a mobile home, which
bears a label as required by and referred to in the act of
November 17, 1982 (P.L.676, No.192), known as the
Manufactured Housing Construction and Safety Standards
Authorization Act.
(2) Industrialized housing as defined in the act of May
11, 1972 (P.L.286, No.70), known as the Industrialized
Housing Act.
"Prebuilt housing builder." A person who makes a prebuilt
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housing sale to a prebuilt housing purchaser.
"Prebuilt housing purchaser." A person who purchases
prebuilt housing in a transaction and who intends to occupy the
unit for residential purposes in this Commonwealth.
"Prebuilt housing sale." A sale of prebuilt housing to a
prebuilt housing purchaser, including a sale to a landlord,
without regard to whether the person making the sale is
responsible for installing the prebuilt housing or whether the
prebuilt housing becomes a real estate structure upon
installation. Temporary installation by a prebuilt housing
builder for display purposes of a unit held for resale shall not
be considered occupancy for residential purposes.
"Premium cable or premium video programming service." As
follows:
(1) Includes the portion of cable television services,
video programming services, community antenna television
services or other distribution of television, video, audio or
radio services which meets all of the following criteria:
(i) Is transmitted with or without the use of wires
to purchasers.
(ii) Consists substantially of programming
uninterrupted by paid commercial advertising which shall
include programming primarily composed of uninterrupted
full-length motion pictures or sporting events, pay-per-
view, paid programming or audio or radio broadcasting.
(iii) Does not constitute a component of a basic
service tier provided by a cable television system or a
cable programming service tier provided by a cable
television system. The following apply:
(A) A basic service tier shall include any of
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the following:
(I) All signals of domestic television
broadcast stations, any public, educational,
governmental or religious programming and
additional video programming signals or service
added to the basic service tier by the cable
operator.
(II) A single additional lower-priced
package of broadcast channels and access
information channels which is a subset of the
basic service tier under subclause (I).
(B) A cable programming service tier shall
include video programming other than any of the
following:
(I) The basic service tier.
(II) Video programming offered on a pay-per-
channel or pay-per-view basis.
(III) A combination of multiple channels of
pay-per-channel or pay-per-view programming
offered as a package.
(2) If a purchaser receives or agrees to receive premium
cable or premium video programming service, then the
following charges are included in the purchase price:
(i) Charges for installation or repair of any
premium cable or premium video programming service.
(ii) Upgrade to include additional premium cable or
premium video programming service.
(iii) Downgrade to exclude all or some premium cable
or premium video programming service.
(iv) Additional premium cable outlets in excess of
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10.
(v) Other charges or fees related to premium cable
or premium video programming services.
(3) The term shall not apply to the following:
(i) Transmissions by public television, public radio
services or official Federal, State or local government
cable services.
(ii) Local origination programming which provides a
variety of public service programs unique to the
community, programming which provides coverage of public
affairs issues which are presented without commentary or
analysis, including United States Congressional
proceedings, or programming which is substantially
related to religious subjects.
(iii) Subscriber charges for access to a video dial
tone system or charges by a common carrier to a video
programmer for the transport of video programming.
"Prepaid mobile telecommunications service." As follows:
(1) Mobile telecommunications service which is paid for
in advance and which enables the origination of calls using
an access number, authorization code or both, whether
manually or electronically dialed, if the remaining amount of
units of the prepaid mobile telecommunications service is
known by the service provider of the prepaid mobile
telecommunications service on a continuous basis.
(2) The term shall not include the advance purchase of
mobile telecommunications service if the purchase is pursuant
to a service contract between the service provider and
customer and if the service contract requires the customer to
make periodic payments to maintain the mobile
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telecommunications service.
"Prepaid telecommunications." A tangible item containing a
prepaid authorization number that can be used solely to obtain
telecommunications service, including a renewal or increase in
the prepaid amount.
"Processing." The performance of the following activities
when engaged in as a business enterprise:
(1) The filtering or heating of honey or the cooking,
baking or freezing of fruits, vegetables, mushrooms, fish,
seafood, meats, poultry or bakery products, when the person
engaged in the business packages the property in sealed
containers for wholesale distribution.
(2) The processing of fruits or vegetables by cleaning,
cutting, coring, peeling or chopping and treating to
preserve, sterilize or purify and substantially extend the
useful shelf life of the fruits or vegetables, when the
person engaged in the activity packages the property in
sealed containers for wholesale distribution.
(3) The scouring, carbonizing, cording, combing,
throwing, twisting or winding of natural or synthetic fibers,
or the spinning, bleaching, dyeing, printing or finishing of
yarns or fabrics, when the activities are performed prior to
sale to the ultimate consumer.
(4) The electroplating, galvanizing, enameling,
anodizing, coloring, finishing, impregnating or heat treating
of metals or plastics for sale or in the process of
manufacturing.
(5) The blanking, shearing, leveling, slitting or
burning of metals for sale to or use by a manufacturer or
processor.
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(6) The rolling, drawing or extruding of ferrous and
nonferrous metals.
(7) The fabrication for sale of ornamental or structural
metal or of metal stairs, staircases, gratings, fire escapes
or railings, not including fabrication work done at the
construction site.
(8) The preparation of animal feed or poultry feed for
sale.
(9) The production, processing and bottling of
nonalcoholic beverages for wholesale distribution.
(10) The operation of a saw mill or planing mill for the
production of lumber or lumber products for sale. The
operation of a saw mill or planing mill begins with the
unloading by the operator of the saw mill or planing mill of
logs, timber, pulpwood or other forms of wood material to be
used in the saw mill or planing mill.
(11) The milling for sale of flour or meal from grains.
(12) The aging, stripping, conditioning, crushing and
blending of tobacco leaves for use as cigar filler or as
components of smokeless tobacco products for sale to
manufacturers of tobacco products.
(13) The slaughtering and dressing of animals for meat
to be sold or to be used in preparing meat products for sale,
and the preparation of meat products, including lard, tallow,
grease, cooking and inedible oils for wholesale distribution.
(14) The processing of used lubricating oils.
(15) The broadcasting of radio and television programs
of licensed commercial or educational stations.
(16) The cooking or baking of bread, pastries, cakes,
cookies, muffins and donuts when the person engaged in the
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activity sells the items at retail at locations that do not
constitute an establishment from which ready-to-eat food and
beverages are sold. For purposes of this paragraph, a bakery,
pastry shop and donut shop are not to be considered an
establishment from which ready-to-eat food and beverages are
sold.
(17) The cleaning and roasting and the blending,
grinding or packaging for sale of coffee from green coffee
beans or the production of coffee extract.
(18) The preparation of dry or liquid fertilizer for
sale.
(19) The production, processing and packaging of ice for
wholesale distribution.
(20) The producing of mobile telecommunications
services.
(21) The collection, washing, sorting, inspecting and
packaging of eggs.
"Promoter." A person who directly or indirectly rents,
leases or otherwise operates or grants permission to a person to
use space at a show for the display for sale or for the sale of
tangible personal property or services subject to tax under
Subchapter A of Chapter 13 (relating to imposition of tax).
"Purchase at retail." As follows:
(1) Any of the following:
(i) The acquisition for a consideration of the
ownership, custody or possession of tangible personal
property other than for resale by the person acquiring
the property when the acquisition is made for the purpose
of consumption or use, whether the acquisition is
absolute or conditional, and by whatever means in which
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the acquisition is made.
(ii) The acquisition of a license to use or consume
and the rental or lease of tangible personal property,
other than for resale, regardless of the period of time
the lessee has possession or custody of the property.
(iii) The obtaining for a consideration of those
services described under paragraph (1)(ii), (iii) or (iv)
of the definition of "sale at retail" other than for
resale.
(iv) A retention after March 7, 1956, of possession,
custody or a license to use or consume under a rental
contract or other lease arrangement, other than as
security, other than for resale.
(v) The obtaining for a consideration of those
services described under paragraph (1)(vi), (vii),
(viii), (ix), (x), (xi) or (xii) of the definition of
"sale at retail."
(2) The term shall include the purchase of liquor from a
Pennsylvania liquor store by a person for any purpose, and
the purchase of malt or brewed beverages from a manufacturer
of malt or brewed beverages, distributor or importing
distributor by a person for any purpose, except purchases
from a manufacturer of malt or brewed beverages by a
distributor or importing distributor or purchases from an
importing distributor by a distributor within the meaning of
the Liquor Code.
(3) The term shall not include a purchase of malt or
brewed beverages from a retail dispenser or a purchase of
liquor or malt or brewed beverages from a person holding a
retail liquor license under the Liquor Code, but shall
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include purchase or acquisition of liquor or malt or brewed
beverages other than under the Liquor Code.
"Purchase price." As follows:
(1) The total value of anything paid or delivered, or
promised to be paid or delivered, whether it be money or
otherwise, in complete performance of a sale at retail or
purchase at retail without any deduction on account of the
cost or value of the property sold, cost or value of
transportation, cost or value of labor or service, interest
or discount paid or allowed after the sale is consummated,
other taxes imposed by the Commonwealth or other expense,
except that a gratuity and a separately stated deposit charge
for returnable containers shall be excluded.
(2) There shall be deducted from the purchase price the
value of any tangible personal property actually taken in
trade or exchange in lieu of the whole or any part of the
purchase price. For the purpose of this paragraph, the amount
allowed by reason of tangible personal property actually
taken in trade or exchange shall be considered the value of
the property.
(3) In determining the purchase price on the sale or use
of taxable tangible personal property or a service where,
because of affiliation of interests between the vendor and
purchaser or irrespective of the affiliation, if for any
other reason the purchase price declared by the vendor or
taxpayer on the taxable sale or use of the tangible personal
property or service is determined by the department not to be
indicative of the true value of the article or service or the
fair price of the article or service, the department shall,
under uniform and equitable rules, determine the amount of
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constructive purchase price upon the basis of which the tax
shall be computed and levied. The rules shall provide for a
constructive amount of purchase price for each sale or use
which would naturally and fairly be charged in an arm's-
length transaction in which the element of common interest
between the vendor or purchaser is absent or if no common
interest exists, any other element causing a distortion of
the price or value is likewise absent. For the purpose of
this paragraph where a taxable sale or purchase at retail
transaction occurs between a parent and a subsidiary,
affiliate or controlled corporation of the parent
corporation, there shall be a rebuttable presumption that
because of the common interest, the transaction was not at
arm's length.
(4) Where there is a transfer or retention of possession
or custody, whether it be termed a rental, lease, service or
otherwise, of tangible personal property including linens,
aprons, motor vehicles, trailers, tires, industrial office
and construction equipment and business machines, the full
consideration paid or delivered to the vendor or lessor shall
be considered the purchase price, even though the
consideration is separately stated and designated as payment
for processing, laundering, service, maintenance, insurance,
repairs, depreciation or otherwise. If the vendor or lessor
supplies or provides an employee to operate the tangible
personal property, the value of the labor supplied may be
excluded and may not be considered as part of the purchase
price if separately stated. There shall also be included as
part of the purchase price the value of anything paid or
delivered, or promised to be paid or delivered, by a lessee,
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whether money or otherwise, to a person other than the vendor
or lessor by reason of the maintenance, insurance or repair
of the tangible personal property which a lessee has the
possession or custody of under a rental contract or lease
arrangement.
(5) With respect to the tax imposed by Subchapter A of
Chapter 13 upon tangible personal property originally
purchased by the user of the property six months or longer
prior to the first taxable use of the property within this
Commonwealth, the user may elect to pay tax on a substituted
base determined by considering the purchase price of the
property for tax purposes to be equal to the prevailing
market price of similar tangible personal property at the
time and place of the first use within this Commonwealth. The
election must be made at the time of filing a tax return with
the department and reporting the tax liability and paying the
proper tax due plus all accrued penalties and interest, if
any, within six months of the due date of the report and
payment, as provided under section 1513(a) and (c) (relating
to time for filing returns).
(6) The purchase price of employment agency services and
help supply services shall be the service fee paid by the
purchaser to the vendor or supplying entity. As used in this
paragraph, the term "service fee" is the total charge or fee
of the vendor or supplying entity minus the costs of the
supplied employee, including wages, salaries, bonuses,
commissions, employment benefits, expense reimbursements and
payroll and withholding taxes, to the extent that these costs
are specifically itemized or that these costs in aggregate
are stated in billings from the vendor or supplying entity.
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To the extent that these costs are not itemized or stated on
the billings, then the service fee shall be the total charge
or fee of the vendor or supplying entity.
(7) Unless the vendor separately states that portion of
the billing which applies to premium cable service, the total
bill for the provision of all cable services shall be the
purchase price.
(8) The purchase price of prebuilt housing shall be 60%
of the manufacturer's selling price, but a manufacturer of
prebuilt housing who precollects tax from a prebuilt housing
builder at the time of the sale to the prebuilt housing
builder shall have the option to collect tax on 60% of the
selling price or on 100% of the actual cost of the supplies
and materials used in the manufacture of the prebuilt
housing.
(9) The purchase price of malt or brewed beverages sold
by a manufacturer of malt or brewed beverages directly to the
ultimate consumer for consumption on or off premises shall be
25% of the retail sales price of the malt or brewed beverages
sold for consumption on or off premises.
"Purchaser." As follows:
(1) A person who acquires, for a consideration, the
ownership, custody or possession by sale, lease or otherwise,
of tangible personal property or who obtains services in
exchange for a purchase price.
(2) The term shall not include an employer who obtains
services from the employer's employees in exchange for wages
or salaries when the services are rendered in the ordinary
scope of employment.
"Real estate structure." As follows:
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(1) A structure or item purchased by a construction
contractor under a construction contract with any of the
following:
(i) A charitable organization, volunteer
firefighters' organization, nonprofit educational
institution or religious organization for religious
purposes and which qualifies as an institution of purely
public charity under the act of November 26, 1997
(P.L.508, No.55), known as the Institutions of Purely
Public Charity Act.
(ii) The United States.
(iii) The Commonwealth, its instrumentalities or
political subdivisions.
(2) The term shall include any of the following:
(i) Building machinery and equipment.
(ii) Developed or undeveloped land.
(iii) Streets, roads and highways.
(iv) Parking lots.
(v) Stadiums and stadium seating.
(vi) Recreational courts.
(vii) Sidewalks.
(viii) Foundations, structural supports, walls,
floors, ceilings, roofs and doors.
(ix) Canopies.
(x) Millwork.
(xi) Elevators.
(xii) Windows and external window coverings.
(xiii) Outdoor advertising boards or signs.
(xiv) Airport runways.
(xv) Bridges, dams and dikes.
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(xvi) Traffic-control devices, including traffic
signs.
(xvii) Satellite dishes and antennas.
(xviii) Guardrail posts.
(xix) Pipes, fittings, pipe supports and hangers.
(xx) Valves.
(xxi) Underground tanks.
(xxii) Wire, conduit, receptacle and junction boxes.
(xxiii) Insulation.
(xxiv) Ductwork and ductwork coverings.
(xxv) A structure or item similar to the items
listed in subparagraphs (i) through (xxiv), whether the
structure or item constitutes a fixture or is affixed to
the real estate, or whether damage would be done to the
structure or item or its surroundings upon removal.
"Resale." As follows:
(1) Any of the following:
(i) A transfer of ownership, custody or possession
of tangible personal property for a consideration,
including the grant of a license to use or consume and
transactions where the possession of the property is
transferred but where the transferor retains title only
as security for payment of the selling price, whether the
transaction is designated as bailment lease, conditional
sale or otherwise.
(ii) The physical incorporation of tangible personal
property as an ingredient or constituent into other
tangible personal property, which is to be sold in the
regular course of business or the performance of those
services described under paragraphs (2), (3) and (4) of
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the definition of "sale at retail" upon tangible personal
property which is to be sold in the regular course of
business or where the person incorporating the property
has undertaken at the time of purchase to cause the
property to be transported in interstate commerce to a
destination outside this Commonwealth.
(2) The term shall include any of the following:
(i) Telecommunications services purchased by a cable
operator or video programmer that are used to transport
or deliver cable or video programming services which are
sold in the regular course of business.
(ii) Tangible personal property purchased or having
a situs within this Commonwealth solely for the purpose
of being processed, fabricated or manufactured into,
attached to or incorporated into tangible personal
property and then transported outside this Commonwealth
for use exclusively outside this Commonwealth.
(3) The term shall not include the sale of malt or
brewed beverages by a retail dispenser or the sale of liquor
or malt or brewed beverages by a person holding a retail
liquor license within the meaning of the Liquor Code.
(4) The physical incorporation of tangible personal
property as an ingredient or constituent in the construction
of foundations for machinery or equipment the sale or use of
which is excluded from tax under the provisions of paragraph
(2)(ii)(A), (B), (C) or (D) of the definition of "sale at
retail" or paragraph (2)(ii)(A), (B), (C) or (D) of the
definition of "use," whether the foundations at the time of
construction or transfer constitute tangible personal
property or real estate.
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(5) The term does not include the purchase price or
repair of a shared vehicle by a shared vehicle owner.
"Resident." Any of the following:
(1) A natural person who:
(i) is domiciled in this Commonwealth; or
(ii) maintains a permanent place of residence within
this Commonwealth and spends in the aggregate more than
60 days of the year within this Commonwealth.
(2) A corporation which:
(i) is incorporated under the laws of this
Commonwealth;
(ii) is authorized to do business or doing business
within this Commonwealth; or
(iii) maintains a place of business within this
Commonwealth.
(3) An association, fiduciary, partnership or other
entity which:
(i) is domiciled in this Commonwealth;
(ii) is authorized to do business or doing business
within this Commonwealth; or
(iii) maintains a place of business within this
Commonwealth.
"Sale at retail." As follows:
(1) Any of the following:
(i) A transfer, for a consideration, of the
ownership, custody or possession of tangible personal
property, including the grant of a license to use or
consume whether the transfer is absolute or conditional
and by whatever means in which the transfer is made.
(ii) The rendition of the service of printing or
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imprinting of tangible personal property for a
consideration for persons who furnish, either directly or
indirectly, the materials used in the printing or
imprinting.
(iii) The rendition for a consideration of the
service of any of the following:
(A) Washing, cleaning, waxing, polishing or
lubricating the motor vehicles of another, whether or
not tangible personal property is transferred.
(B) Inspecting motor vehicles under the
mandatory requirements of 75 Pa.C.S. (relating to
vehicles).
(iv) The rendition for a consideration of the
service of repairing, altering, mending, pressing,
fitting, dyeing, laundering, drycleaning or cleaning
tangible personal property other than wearing apparel or
shoes, or applying or installing tangible personal
property as a repair or replacement part of other
tangible personal property except wearing apparel or
shoes for a consideration, whether the services are
performed directly or by any means other than by coin-
operated self-service laundry equipment for wearing
apparel or household goods and whether tangible personal
property is transferred, except services that are
rendered in the construction, reconstruction, remodeling,
repair or maintenance of real estate. This subparagraph
shall not be deemed to impose tax upon these services in
the preparation for sale of new items which are excluded
from the tax under section 1321(17) (relating to
exclusions) or upon diaper service.
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(v) The retention of possession, custody or a
license to use or consume tangible personal property or
any further obtaining of services described under
subparagraph (ii), (iii) or (iv) under a rental or
service contract or other arrangement, other than as
security.
(vi) The rendition for a consideration of lobbying
services.
(vii) The rendition for a consideration of
adjustment services, collection services or credit
reporting services.
(viii) The rendition for a consideration of
secretarial or editing services.
(ix) The rendition for a consideration of
disinfecting or pest control services, building
maintenance or cleaning services.
(x) The rendition for a consideration of employment
agency services or help supply services.
(xi) The rendition for a consideration of lawn care
service.
(xii) The rendition for a consideration of self-
storage service.
(xiii) The rendition for a consideration of a mobile
telecommunications service.
(xiv) Car sharing through a shared vehicle owner,
peer-to-peer car-sharing program marketplace facilitator
or rental company.
(2) The term shall not include any of the following:
(i) A transfer of tangible personal property or
rendition of services for the purpose of resale.
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(ii) Except as provided under paragraph (3), the
rendition of services or the transfer of tangible
personal property including machinery and equipment and
machinery and equipment parts and supplies to be used or
consumed by the purchaser directly in the operations of
any of the following:
(A) The manufacture of tangible personal
property.
(B) Farming, dairying, agriculture, timbering,
horticulture or floriculture when engaged in as a
business enterprise. As used in this clause:
(I) The term "farming" shall include the
propagation and raising of ranch raised fur-
bearing animals and the propagation of game birds
for commercial purposes by holders of propagation
permits issued under 34 Pa.C.S. (relating to
game) and the propagation and raising of horses
to be used exclusively for commercial racing
activities.
(II) The term "timbering" shall include any
of the following, except the harvesting of trees
for clearing land for access roads:
(a) The business of producing or
harvesting trees from forests, woodlots or
tree farms for the purpose of the commercial
production of wood, paper or energy products
derived from wood by a company primarily
engaged in the business of harvesting trees.
(b) All operations prior to the
transport of the harvested product necessary
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for the removal of timber or forest products
from the site, in-field processing of trees
into logs or chips, complying with
environmental protection and safety
requirements applicable to the harvesting of
forest products, loading of forest products
onto highway vehicles for transport to
storage or processing facilities and
postharvesting site reclamation, including
those activities necessary to improve timber
growth or ensure natural or direct
reforestation of the site.
(C) Except as provided under paragraph (4), the
producing, delivering or rendering of a public
utility service, or in constructing, reconstructing,
remodeling, repairing or maintaining the facilities
which are directly used in producing, delivering or
rendering the service.
(D) Processing.
(3) The exclusions under paragraph (2)(ii)(A), (B), (C)
and (D) shall not apply to any of the following:
(i) A vehicle required to be registered under 75
Pa.C.S., except those vehicles used directly by a public
utility engaged in business as a common carrier or to
maintenance facilities or to materials, supplies or
equipment to be used or consumed in the construction,
reconstruction, remodeling, repair or maintenance of real
estate, other than directly used machinery, equipment,
parts or foundations that may be affixed to the real
estate.
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(ii) Tangible personal property or services to be
used or consumed in managerial sales or other
nonoperational activities or to the purchase or use of
tangible personal property or services by a person other
than the person directly using the property or services
in the operations described under paragraph (2)(ii)(A),
(B), (C) and (D).
(iii) The services described under any of the
following:
(A) Paragraph (1)(vi), (vii), (viii), (ix), (x),
(xi) and (xii).
(B) The definition of any of the following:
(I) "Adjustment services, collection
services or credit reporting services."
(II) "Building maintenance or cleaning
services."
(III) "Disinfecting or pest control
services," except that the exclusion provided
under this definition for farming, dairying and
agriculture shall apply to disinfecting or pest
control services.
(IV) "Employment agency services."
(V) "Help supply services."
(VI) "Lawn care service."
(VII) "Lobbying services."
(VIII) "Secretarial or editing services."
(IX) "Self-storage service."
(4) The exclusions under paragraph (2)(ii)(C) shall not
apply to any of the following:
(i) Construction materials, supplies or equipment
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used to construct, reconstruct, remodel, repair or
maintain facilities not used directly by the purchaser in
the production, delivering or rendition of public utility
service.
(ii) Construction materials, supplies or equipment
used to construct, reconstruct, remodel, repair or
maintain a building, road or similar structure.
(iii) Tools and equipment used but not installed in
the maintenance of facilities used directly in the
production, delivering or rendition of a public utility
service.
(5) If tangible personal property or services are
utilized for purposes constituting a sale at retail and for
purposes excluded from the definition of "sale at retail," it
shall be presumed that the tangible personal property or
services are utilized for purposes constituting a sale at
retail and subject to tax unless the user proves to the
department that the predominant purposes for which the
tangible personal property or services are utilized do not
constitute a sale at retail.
(6) With respect to liquor and malt or brewed beverages,
as follows:
(i) The term shall include the sale of liquor by a
Pennsylvania liquor store to a person for any purpose and
the sale of malt or brewed beverages by a manufacturer of
malt or brewed beverages, distributor or importing
distributor to a person for any purpose, except sales by
a manufacturer of malt or brewed beverages to a
distributor or importing distributor or sales by an
importing distributor to a distributor within the meaning
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of the Liquor Code.
(ii) The term shall not include a sale of malt or
brewed beverages by a retail dispenser or a sale of
liquor or malt or brewed beverages by a person holding a
retail liquor license under the Liquor Code, but shall
include a sale of liquor or malt or brewed beverages
other than under the Liquor Code.
"Secretarial or editing services." As follows:
(1) Providing services that include editing, letter
writing, proofreading, resume writing, typing or word
processing.
(2) The term shall not include court reporting and
stenographic services.
"Self-storage service." As follows:
(1) Providing a building, a room in a building or a
secured area within a building with separate access provided
for each purchaser of self-storage service, primarily for the
purpose of storing personal property.
(2) The term shall not include providing any of the
following:
(i) Safe deposit boxes by financial institutions.
(ii) Storage in refrigerator or freezer units.
(iii) Storage in commercial warehouses.
(iv) Facilities for goods distribution.
(v) Lockers in airports, bus stations, museums and
other public places.
"Shared vehicle." A vehicle that is available for sharing,
including through a peer-to-peer car-sharing program.
"Shared vehicle owner." The registered owner, or a person
designated by the registered owner, of a vehicle made available
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for sharing, including through a peer-to-peer car-sharing
program.
"Show." An event, the primary purpose of which involves the
display or exhibition of tangible personal property or services
for sale, including a flea market, antique show, coin show,
stamp show, comic book show, hobby show, automobile show, fair
or similar show, whether held regularly or of a temporary
nature, at which more than one vendor displays for sale or sells
tangible personal property or services subject to tax under
Subchapter A of Chapter 13.
"Soft drinks." As follows:
(1) All nonalcoholic beverages, whether carbonated or
not, including any of the following:
(i) Soda water.
(ii) Ginger ale, Coca-Cola, lime cola, Pepsi, Dr.
Pepper and root beer.
(iii) Fruit juice when plain or when carbonated
water, flavoring or syrup is added.
(iv) Carbonated water.
(v) Orangeade and lemonade.
(vi) Other preparations and beverages commonly
referred to as soft drinks, which are made with or
without the use of any syrup.
(2) The term shall not include any of the following:
(i) Natural fruit or vegetable juices or their
concentrates.
(ii) Noncarbonated fruit juice drinks containing not
less than 25% by volume of natural fruit juices or of
fruit juice which has been reconstituted to its original
state, or natural concentrated fruit or vegetable juices
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reconstituted to their original state, whether any of the
natural juices are frozen or unfrozen, sweetened or
unsweetened, seasoned with salt or spice or unseasoned.
(iii) Coffee, coffee substitutes, tea or cocoa.
(iv) Natural fluid milk or noncarbonated drinks made
from milk derivatives.
"Storage." As follows:
(1) The keeping or retention of tangible personal
property within this Commonwealth for any purpose, including
the interim keeping, retaining or exercising a right or power
over the tangible personal property.
(2) The term is not limited to the provision of self-
storage service.
"Tangible personal property." As follows:
(1) Corporeal personal property, including any of the
following:
(i) Goods, wares and merchandise.
(ii) Steam and natural, manufactured and bottled gas
for nonresidential use.
(iii) Electricity for nonresidential use.
(iv) Prepaid telecommunications.
(v) Premium cable or premium video programming
service.
(vi) Spirituous or vinous liquor, malt or brewed
beverages and soft drinks.
(vii) Interstate telecommunications service
originating or terminating in this Commonwealth and
charged to a service address in this Commonwealth.
(viii) Intrastate telecommunications service with
the exception of:
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(A) Subscriber line charges and basic local
telephone service for residential use.
(B) Charges for telephone calls paid for by
inserting money into a telephone accepting direct
deposits of money to operate if the service address
of an intrastate telecommunications service is deemed
to be within this Commonwealth or within a political
subdivision, regardless of how or where billed or
paid. In the case of an interstate or intrastate
telecommunications service, a charge paid through a
credit or payment mechanism which does not relate to
a service address, such as a bank, travel, credit or
debit card, but not including prepaid
telecommunications, is deemed attributable to the
address of origination of the telecommunications
service.
(2) The term shall include the following, whether
electronically or digitally delivered, streamed or accessed
and whether purchased singly, by subscription or in any other
manner, including maintenance and updates:
(i) Video.
(ii) Photographs.
(iii) Books.
(iv) Other taxable printed matter.
(v) Applications, commonly known as apps.
(vi) Games.
(vii) Music.
(viii) Other audio, including satellite radio
service.
(ix) Canned software, notwithstanding the function
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performed, including support, except separately invoiced
help desk or call center support.
(x) Other taxable tangible personal property
electronically or digitally delivered, streamed or
accessed.
"Taxpayer." A person required to pay or collect the tax
imposed by this subpart, including a marketplace facilitator, a
marketplace seller , a peer-to-peer car-sharing program
marketplace facilitator and a shared vehicle owner .
"Telecommunications service." As follows:
(1) A one-way transmission or a two-way, interactive
transmission of sounds, signals or other intelligence
converted to like form which effects or is intended to effect
meaningful communications by electronic or electromagnetic
means via wire, cable, satellite, light waves, microwaves,
radio waves or other transmission media.
(2) The term shall include any of the following:
(i) Local, toll, wide-area or any other type of
telephone service.
(ii) Private line service.
(iii) Telegraph service.
(iv) Radio repeater service.
(v) Wireless communication service.
(vi) Personal communications system service.
(vii) Cellular telecommunication service.
(viii) Specialized mobile radio service.
(ix) Stationary two-way radio service.
(x) Paging service.
(3) The term shall not include any of the following:
(i) Subscriber charges for access to a video dial
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tone system.
(ii) Charges to video programmers for the transport
of video programming.
(iii) Charges for access to the Internet. Access to
the Internet shall not include any of the following:
(A) The transport over the Internet or a
proprietary network using the Internet protocol of
telephone calls, facsimile transmissions or other
telecommunications traffic to or from end users on
the public switched telephone network if the signal
sent from or received by an end user is not in an
Internet protocol.
(B) Telecommunications service purchased by an
Internet service provider to deliver access to the
Internet to its customers.
(iv) Mobile telecommunications service.
"Transient vendor." As follows:
(1) A person who satisfies all of the following
conditions:
(i) Brings into this Commonwealth, by automobile,
truck or other means of transportation, or purchases in
this Commonwealth, tangible personal property the sale or
use of which is subject to the tax imposed by this part
or comes into the Commonwealth to perform services the
sale or use of which is subject to the tax imposed by
this part.
(ii) Offers or intends to offer tangible personal
property or services for sale at retail within this
Commonwealth.
(iii) Does not maintain an established office,
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distribution house, saleshouse, warehouse, service
enterprise, residence from which business is conducted or
other place of business within this Commonwealth.
(2) The term shall not include a person who:
(i) delivers tangible personal property within this
Commonwealth under orders for the property which were
solicited or placed by mail or other means; or
(ii) handcrafts items for sale at special events,
including, but not limited to, fairs, carnivals, art and
craft shows and other festivals and celebrations within
this Commonwealth.
"Use." As follows:
(1) Any of the following:
(i) The exercise of a right or power incidental to
the ownership, custody or possession of tangible personal
property, including transportation, storage or
consumption.
(ii) The obtaining by a purchaser of the service of
any of the following:
(A) Printing or imprinting of tangible personal
property when the purchaser furnishes, either
directly or indirectly, the articles used in the
printing or imprinting.
(B) Washing, cleaning, waxing, polishing or
lubricating of motor vehicles, whether a tangible
personal property is transferred to the purchaser in
conjunction with the services.
(C) Inspecting motor vehicles under the
mandatory requirements of 75 Pa.C.S.
(D) Repairing, altering, mending, pressing,
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fitting, dyeing, laundering, drycleaning or cleaning
tangible personal property other than wearing apparel
or shoes or applying or installing tangible personal
property as a repair or replacement part of other
tangible personal property other than wearing apparel
or shoes, whether the services are performed directly
or by any means other than by means of coin-operated
self-service laundry equipment for wearing apparel or
household goods, and whether tangible personal
property is transferred to the purchaser in
conjunction with the services, except the services as
are obtained in the construction, reconstruction,
remodeling, repair or maintenance of real estate.
This clause shall not be deemed to impose tax upon
these services in the preparation for sale of new
items which are excluded from the tax under section
1321(17) or upon diaper service.
(iii) The obtaining by the purchaser of lobbying
services.
(iv) The obtaining by the purchaser of adjustment
services, collection services or credit reporting
services.
(v) The obtaining by the purchaser of secretarial or
editing services.
(vi) The obtaining by the purchaser of disinfecting
or pest control services, building maintenance or
cleaning services.
(vii) The obtaining by the purchaser of employment
agency services or help supply services.
(viii) The obtaining by the purchaser of lawn care
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service.
(ix) The obtaining by the purchaser of self-storage
service.
(x) The obtaining by a construction contractor of
tangible personal property or services provided to
tangible personal property which will be used under a
construction contract whether or not the tangible
personal property or services are transferred.
(xi) The obtaining of mobile telecommunications
service by a customer.
(xii) Car sharing through a shared vehicle owner,
peer-to-peer car-sharing program marketplace facilitator
or rental company.
(2) The term shall not include any of the following:
(i) Tangible personal property acquired and kept,
retained or over which power is exercised within this
Commonwealth on which the taxing of the storage, use or
other consumption is expressly prohibited by the
Constitution of the United States or which is excluded
from tax under other provisions of this subpart.
(ii) Except as provided under paragraph (3), the use
or consumption of tangible personal property, including
machinery and equipment and machinery and equipment parts
and supplies or the obtaining of the services described
under paragraph (1)(ii)(A), (B), (C) or (D) directly in
the operations of any of the following:
(A) The manufacture of tangible personal
property.
(B) Farming, dairying, agriculture, timbering,
horticulture or floriculture when engaged in as a
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business enterprise. As used in this clause:
(I) The term "farming" shall include the
propagation and raising of ranch-raised
furbearing animals and the propagation of game
birds for commercial purposes by holders of
propagation permits issued under 34 Pa.C.S. and
the propagation and raising of horses to be used
exclusively for commercial racing activities.
(II) The term "timbering" shall include any
of the following, except the harvesting of trees
for clearing land for access roads:
(a) The business of producing or
harvesting trees from forests, woodlots or
tree farms for the purpose of the commercial
production of wood, paper or energy products
derived from wood by a company primarily
engaged in the business of harvesting trees.
(b) All operations prior to the
transport of the harvested product necessary
for the removal of timber or forest products
from the site, in-field processing of trees
into logs or chips, complying with
environmental protection and safety
requirements applicable to the harvesting of
forest products, loading of forest products
onto highway vehicles for transport to
storage or processing facilities and
postharvesting site reclamation, including
those activities necessary to improve timber
growth or ensure natural or direct
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reforestation of the site. The term shall not
include the harvesting of trees for clearing
land for access roads.
(C) Except as provided under paragraph (4), the
producing, delivering or rendering of a public
utility service or in constructing, reconstructing,
remodeling, repairing or maintaining the facilities
which are directly used in producing, delivering or
rendering the service.
(D) Processing.
(iii) The providing of a motor vehicle to a
nonprofit private or public school to be used by the
school for the sole purpose of driver education.
(3) The exclusions provided under paragraph (2)(ii)
shall not apply to any of the following:
(i) A vehicle required to be registered under 75
Pa.C.S. except those vehicles directly used by a public
utility engaged in the business as a common carrier.
(ii) Maintenance facilities.
(iii) Materials, supplies or equipment to be used or
consumed in the construction, reconstruction, remodeling,
repair or maintenance of real estate other than directly
used machinery, equipment, parts or foundations for the
maintenance of real estate that may be affixed to the
real estate.
(iv) Tangible personal property or services to be
used or consumed in managerial sales or other
nonoperational activities or to the purchase or use of
tangible personal property or services by a person other
than the person directly using the same in the operations
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described under paragraph (2)(ii).
(v) The services described under any of the
following:
(A) Paragraph (1)(vi), (vii), (viii), (ix), (x)
or (xi).
(B) The definition of any of the following:
(I) "Adjustment services, collection
services or credit reporting services."
(II) "Building maintenance or cleaning
services."
(III) "Disinfecting or pest control
services," except that the exclusion provided
under this definition for farming, dairying and
agriculture shall apply to disinfecting or pest
control services.
(IV) "Employment agency services."
(V) "Help supply services."
(VI) "Lawn care service."
(VII) "Lobbying services."
(VIII) "Secretarial or editing service."
(IX) "Self-storage service."
(4) The exclusion provided under paragraph (2)(ii)(C)
shall not apply to any of the following:
(i) Construction materials, supplies or equipment
used to construct, reconstruct, remodel, repair or
maintain facilities not used directly by the purchaser in
the production, delivering or rendition of public utility
service.
(ii) Tools and equipment used but not installed in
the maintenance of facilities used directly in the
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production, delivering or rendition of a public utility
service.
(5) Where tangible personal property or services are
utilized for purposes constituting a use, and for purposes
excluded from the definition of "use," it shall be presumed
that the property or services are utilized for purposes
constituting a sale at retail and subject to tax unless the
user proves to the department that the predominant purposes
for which the property or services are utilized do not
constitute a sale at retail.
(6) With respect to liquor and malt or brewed beverages,
as follows:
(i) The term shall include the purchase of liquor
from a Pennsylvania liquor store by a person for any
purpose and the purchase of malt or brewed beverages from
a manufacturer of malt or brewed beverages, distributor
or importing distributor by a person for any purpose,
except purchases from a manufacturer of malt or brewed
beverages by a distributor or importing distributor, or
purchases from an importing distributor by a distributor
within the meaning of the Liquor Code.
(ii) The term shall not include a purchase of malt
or brewed beverages from a retail dispenser or a purchase
of liquor or malt or brewed beverages from a person
holding a retail liquor license under the Liquor Code,
but shall include the exercise of a right or power
incidental to the ownership, custody or possession of
liquor or malt or brewed beverages obtained by the person
exercising the right or power in any manner other than
under the Liquor Code.
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(7) The use of tangible personal property purchased at
retail upon which the services described under paragraph (1)
(ii) have been performed shall be deemed to be a use of the
services by the person using the property.
"Used prebuilt housing." Prebuilt housing that was
previously subject to a sale to a prebuilt housing purchaser.
"Vendor." A person maintaining a place of business in this
Commonwealth, selling or leasing tangible personal property or
rendering services, the sale or use of which is subject to the
tax imposed by this subpart, including a marketplace
facilitator, a marketplace seller, peer-to-peer car-sharing
program marketplace facilitator or shared vehicle owner, but not
including an employee who, in the ordinary scope of employment,
renders services to an employer in exchange for wages and
salaries.
CHAPTER 13
TAXATION GENERALLY
Subchapter
A. Imposition of Tax
B. Computation of Tax
C. Exclusions from Tax
D. Licenses
E. Hotel Occupancy Tax
F. Remote Sellers
SUBCHAPTER A
IMPOSITION OF TAX
Sec.
1301. Sale of tangible personal property or services.
1302. Use of tangible personal property or services.
1303. Telecommunications service.
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1304. Coin-operated vending machines.
1305. Prepaid telecommunications.
1306. Prepaid mobile communications service.
1307. Prebuilt housing.
1308. Mobile telecommunications services.
1309. Malt or brewed beverages.
§ 1301. Sale of tangible personal property or services.
(a) Imposition.--There is imposed upon each separate sale at
retail of tangible personal property or services within this
Commonwealth a tax of 6% of the purchase price.
(b) Collection.--The tax under this section shall, except as
otherwise provided, be collected by the vendor or other person
required by this part from the purchaser and shall be paid to
the Commonwealth as provided in this subpart.
§ 1302. Use of tangible personal property or services.
(a) Imposition.--There is imposed upon the use, on or after
the effective date of this section, within this Commonwealth of
tangible personal property purchased at retail on or after the
effective date of this section and on those services described
in this chapter and purchased at retail on or after the
effective date of this section a tax of 6% of the purchase
price.
(b) Collection.--The tax under this section shall, except as
otherwise provided, be paid to the Commonwealth by the person
who makes the use as provided under subsection (a), except that
the tax shall not be paid to the Commonwealth by the person if
the person has paid the tax imposed by section 1301 (relating to
sale of tangible personal property or services) or has paid the
tax imposed by this section to the vendor with respect to the
use or the vendor advertises or holds out or states to the
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person directly or indirectly subject to the conditions
specified in section 1584(b) (relating to crimes) that the
vendor will pay the tax imposed by section 1301 or this section
for the person. The tax at the rate of 6% imposed by this
section shall not be deemed applicable if the tax has been
incurred under the former act of March 6, 1956 (1955 P.L.1228,
No.381), known as the Tax Act of 1963 for Education.
§ 1303. Telecommunications service.
(a) Imposition.--Subject to subsection (b), notwithstanding
any other provision of this subpart, except for telegrams paid
for in cash at telegraph offices, the tax with respect to
telecommunications service shall be computed at the rate of 6%
upon the total amount charged to customers for the services,
irrespective of whether the charge is based upon a flat rate or
upon a message unit charge.
(b) Exception.--Charges for telephone calls paid for by
inserting money into a telephone accepting direct deposits of
money to operate shall not be subject to the tax under this
section.
(c) Liability.--A telecommunications service provider shall
have no responsibility or liability to the Commonwealth for
billing, collecting or remitting taxes that apply to services,
products or other commerce sold over telecommunications lines by
third-party vendors.
(d) Credit.--To prevent actual multistate taxation of
interstate telecommunications service, a taxpayer, upon proof
that the taxpayer has paid a similar tax to another state on the
same interstate telecommunications service, shall be allowed a
credit against the tax imposed by this section on the same
interstate telecommunications service to the extent of the
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amount of the tax properly due and paid to the other state.
§ 1304. Coin-operated vending machines.
Notwithstanding any other provision of this subpart, the sale
or use of food and beverages dispensed by means of a coin-
operated vending machine shall be taxed at the rate of 6% of the
receipts collected from the machine which dispenses food and
beverages taxable under this subpart.
§ 1305. Prepaid telecommunications.
(a) Imposition.--Notwithstanding any provision of this
subpart, the sale or use of prepaid telecommunications evidenced
by the transfer of tangible personal property shall be subject
to the tax imposed by sections 1301 (relating to sale of
tangible personal property or services) and 1302 (relating to
use of tangible personal property or services).
(b) Transfer of tangible personal property.--
(1) Subject to paragraph (2), the sale or use of prepaid
telecommunications not evidenced by the transfer of tangible
personal property shall be subject to the tax imposed by
sections 1301 and 1302 and shall be deemed to occur at the
purchaser's billing address.
(2) Notwithstanding paragraph (1), the sale or use of
prepaid telecommunications service not evidenced by the
transfer of tangible personal property shall be taxed at the
rate of 6% of the receipts collected on each sale if the
service provider elects to collect the tax imposed by this
subpart on receipts of each sale. The service provider shall
notify the department of the service provider's election and
shall collect the tax on receipts of each sale until the
service provider notifies the department otherwise.
§ 1306. Prepaid mobile communications service.
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(a) Imposition.--Notwithstanding any other provision of this
subpart, the sale or use of prepaid mobile telecommunications
service evidenced by the transfer of tangible personal property
shall be subject to the tax imposed by sections 1301 (relating
to sale of tangible personal property or services) and 1302
(relating to use of tangible personal property or services).
(b) Transfer of tangible personal property.--
(1) Subject to paragraph (2), the sale or use of prepaid
mobile telecommunications service not evidenced by the
transfer of tangible personal property shall be subject to
the tax imposed by sections 1301 and 1302 and shall be deemed
to occur at the purchaser's billing address or the location
associated with the mobile telephone number or the point of
sale, whichever is applicable.
(2) Notwithstanding paragraph (1), the sale or use of
prepaid mobile telecommunications service not evidenced by
the transfer of tangible personal property shall be taxed at
the rate of 6% of the receipts collected on each sale if the
service provider elects to collect the tax imposed by this
subpart on receipts of each sale. The service provider shall
notify the department of the service provider's election and
shall collect the tax on receipts of each sale until the
service provider notifies the department otherwise.
§ 1307. Prebuilt housing.
Notwithstanding any other provision of this subpart, tax with
respect to sales of prebuilt housing shall be imposed on the
prebuilt housing builder at the time of the prebuilt housing
sale within this Commonwealth and shall be paid and reported by
the prebuilt housing builder to the department in the time and
manner provided in this subpart, but a manufacturer of prebuilt
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housing may, at its option, precollect the tax from the prebuilt
housing builder at the time of sale to the prebuilt housing
builder. In any case where prebuilt housing is purchased and the
tax is not paid by the prebuilt housing builder or precollected
by the manufacturer, the prebuilt housing purchaser shall remit
tax directly to the department if the prebuilt housing is used
in this Commonwealth without regard to whether the prebuilt
housing becomes a real estate structure.
§ 1308. Mobile telecommunications services.
Notwithstanding any other provisions of this subpart and in
accordance with the Mobile Telecommunications Sourcing Act, the
sale or use of mobile telecommunications services which are
deemed to be provided to a customer by a home service provider
under section 117 of the Mobile Telecommunications Sourcing Act
shall be subject to the tax of 6% of the purchase price, which
tax shall be collected by the home service provider from the
customer and shall be paid over to the Commonwealth as provided
in this subpart if the customer's place of primary use is
located within this Commonwealth, regardless of where the mobile
telecommunications services originate, terminate or pass
through. For purposes of this section, words and phrases used in
this section shall have the same meanings given to them in the
Mobile Telecommunications Sourcing Act.
§ 1309. Malt or brewed beverages.
(a) Imposition.--The tax shall be imposed on a manufacturer
of malt or brewed beverages with respect to sales of malt or
brewed beverages sold by the manufacturer directly to the
ultimate consumer for consumption on or off premises
notwithstanding any of the following:
(1) Any other provision of this subpart.
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(2) Article II-B of the Tax Reform Code of 1971.
(3) The act of July 28, 1953 (P.L.723, No.230), known as
the Second Class County Code.
(4) Chapter 5 or Chapter 6 of the act of June 5, 1991
(P.L.9, No.6), known as the Pennsylvania Intergovernmental
Cooperation Authority Act for Cities of the First Class.
(b) Payment.--The tax imposed under subsection (a) shall be
paid and reported by the manufacturer of malt or brewed
beverages to the department in the time and manner provided in
this subpart.
(c) Local alcoholic beverage tax.--A school district or
local government authorized to impose a local alcoholic beverage
tax under the act of June 10, 1971 (P.L.153, No.7), known as the
First Class School District Liquor Sales Tax Act of 1971, or 53
Pa.C.S. § 8602 (relating to local financial support) may impose
or continue to impose a local alcoholic beverage tax on the sale
at retail of malt or brewed beverages made by a manufacturer of
malt or brewed beverages to the ultimate consumer for
consumption on or off premises at the same rate as authorized
under the First Class School District Liquor Sales Tax Act of
1971 or 53 Pa.C.S. § 8602 and notwithstanding anything to the
contrary in such laws or in a local law or ordinance in
existence on the effective date of this section.
(d) Effect of payment.--The payment of the tax imposed under
subsection (a) shall eliminate the need for the ultimate
consumer to pay or remit a sales or use tax on the related
transaction or upon the subsequent use of the malt or brewed
beverages.
SUBCHAPTER B
COMPUTATION OF TAX
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Sec.
1311. Computation.
§ 1311. Computation.
The amount of tax imposed by Subchapter A (relating to
imposition of tax) shall be computed as follows:
(1) If the purchase price is 10¢ or less, no tax shall
be collected.
(2) If the purchase price is 11¢ or more but less than
18¢, 1¢ shall be collected.
(3) If the purchase price is 18¢ or more but less than
35¢, 2¢ shall be collected.
(4) If the purchase price is 35¢ or more but less than
51¢, 3¢ shall be collected.
(5) If the purchase price is 51¢ or more but less than
68¢, 4¢ shall be collected.
(6) If the purchase price is 68¢ or more but less than
85¢, 5¢ shall be collected.
(7) If the purchase price is 85¢ or more but less than
$1.01, 6¢ shall be collected.
(8) If the purchase price is more than $1, 6% of each
dollar of purchase price plus the bracket charges under
paragraphs (1), (2), (3), (4), (5), (6) and (7) upon any
fractional part of a dollar in excess of even dollars shall
be collected.
SUBCHAPTER C
EXCLUSIONS FROM TAX
Sec.
1321. Exclusions.
1322. Alternate imposition of tax and credits.
1323. Credit against tax.
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§ 1321. Exclusions.
The tax imposed under Subchapter A (relating to imposition of
tax) shall not be imposed upon any of the following:
(1) The sale at retail or use of tangible personal
property, other than a motor vehicle, trailer, semitrailer,
motor boat, aircraft or other similar tangible personal
property required under either Federal law or the laws of
this Commonwealth to be registered or licensed, or a service
sold by or purchased from a person not a vendor in an
isolated transaction or sold by or purchased from a person
who is a vendor but is not a vendor with respect to the
tangible personal property or service sold or purchased in
the transaction, provided that inventory and stock in trade
sold or purchased shall not be excluded from the tax by the
provisions of this section.
(2) The use of tangible personal property purchased by a
nonresident person outside this Commonwealth and brought into
this Commonwealth for use in this Commonwealth for a period
not to exceed seven days or for any period of time when the
nonresident is a tourist or vacationer and, in either case,
not consumed within this Commonwealth.
(3) The use of tangible personal property purchased
outside this Commonwealth for use outside this Commonwealth
by a then-nonresident natural person or a business entity not
actually doing business within this Commonwealth, who later
brings the tangible personal property into this Commonwealth
in connection with the establishment of a permanent business
or residence in this Commonwealth, if the property was
purchased more than six months prior to the date it was first
brought into this Commonwealth or prior to the establishment
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of the business or residence, whichever occurs first. This
exclusion shall not apply to tangible personal property
temporarily brought into this Commonwealth for the
performance of contracts for the construction,
reconstruction, remodeling, repairing and maintenance of real
estate.
(4) The sale at retail or use of any of the following:
(i) Disposable diapers.
(ii) Premoistened wipes.
(iii) Incontinence products.
(iv) Colostomy deodorants.
(v) Toilet paper.
(vi) Sanitary napkins, tampons or similar items used
for feminine hygiene.
(vii) Toothpaste, toothbrushes or dental floss.
(5) The sale at retail or use of any of the following:
(i) Any of the following when purchased directly by
the user solely for the user's own residential use:
(A) Steam.
(B) Natural, manufactured and bottled gas.
(C) Fuel oil.
(D) Electricity.
(E) Intrastate subscriber line charges, basic
local telephone service or telegraph service.
(ii) Charges for a telephone call paid for by
inserting money into a telephone accepting direct
deposits of money to operate.
(6) The sale at retail to or use of tangible personal
property or services other than under a construction
contract. The following apply:
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(i) The exclusion under this paragraph applies to
any of the following:
(A) A charitable organization.
(B) A volunteer firefighters' organization.
(C) A volunteer firefighters' relief association
as defined in 35 Pa.C.S. § 7412 (relating to
definitions).
(D) A nonprofit educational institution.
(E) A religious organization for religious
purposes.
(ii) The exclusion under this paragraph shall not
apply with respect to any of the following:
(A) Tangible personal property or services used
in an unrelated trade or business carried on by the
organization or institution.
(B) Materials, supplies and equipment used and
transferred to the organization or institution in the
construction, reconstruction, remodeling, renovation,
repairs and maintenance of a real estate structure,
other than building machinery and equipment, except
materials and supplies when purchased by the
organization or institution for routine maintenance
and repairs.
(iii) If the department has issued sales tax-exempt
status to a volunteer firefighters' organization or a
volunteer firefighters' relief association, the sales
tax-exempt status may not expire unless the activities of
the organization or association change so that the
organization or association does not qualify as an
institution of purely public charity, in which case the
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organization or association shall immediately notify the
department of the change.
(iv) If the department ascertains that an
organization or association no longer qualifies as an
institution of purely public charity, the department may
revoke the sales tax-exempt status of the organization or
association.
(7) The sale at retail or use of gasoline and other
motor fuels, the sales of which are otherwise subject to
excise taxes under 75 Pa.C.S. Ch. 90 (relating to liquid
fuels and fuels tax).
(8) The sale at retail to or use by the United States,
this Commonwealth or the Commonwealth's instrumentalities or
political subdivisions of tangible personal property or
services.
(9) The sale at retail or use of wrapping paper,
wrapping twine, bags, cartons, tape, rope, labels,
nonreturnable containers, all other wrapping supplies and
kegs used to contain malt or brewed beverages, if the use is
incidental to the delivery of personal property. A charge for
wrapping or packaging shall be subject to tax at the rate
imposed by Subchapter B (relating to computation of tax)
unless the property wrapped or packaged will be resold by the
purchaser of the wrapping or packaging service. As used in
this paragraph, the term "carton" includes a corrugated box
used by a person engaged in the manufacture of snack food
products to deliver the manufactured product, whether or not
the box is returnable for potential reuse.
(10) The sale at retail or use of a vessel designed for
commercial use of registered tonnage of 50 tons or more if
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produced by the builders of the vessel upon special order of
the purchaser.
(11) The sale at retail of tangible personal property or
services used or consumed in building, rebuilding, repairing,
making an addition to or making a replacement in and upon a
vessel designed for commercial use of registered tonnage of
50 tons or more upon special order of the purchaser or if the
vessel is rebuilt, repaired or enlarged or when a replacement
is made to the vessel upon order of or for the account of the
owner.
(12) The sale at retail or use of tangible personal
property or services used or consumed for ship cleaning or
maintenance or as fuel, supplies, ships' equipment, ships'
stores or sea stores on a vessel designed for commercial use
of registered tonnage of 50 tons or more to be operated
principally outside the limits of this Commonwealth.
(13) The sale at retail or use of any of the following:
(i) Prescription or nonprescription medicines, drugs
or medical supplies.
(ii) Crutches and wheelchairs for the use of
individuals with disabilities.
(iii) An artificial limb, artificial eye and
artificial hearing device if designed to be worn on the
person of the purchaser or user.
(iv) False teeth and materials used by a dentist in
dental treatment.
(v) Eyeglasses if especially designed or prescribed
by an ophthalmologist, oculist or optometrist for the
personal use of the owner or purchaser.
(vi) Artificial braces and supports designed solely
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for the use of individuals with disabilities.
(vii) Any other therapeutic, prosthetic or
artificial device designed for the use of a particular
individual to correct or alleviate a physical incapacity,
including a hospital bed, iron lung and kidney machine.
(14) The sale at retail or use of coal.
(15) The sale at retail or use of a motor vehicle,
trailer and semitrailer, or a body attached to the chassis of
a motor vehicle, trailer or semitrailer, which is:
(i) sold to a nonresident of this Commonwealth to be
used outside this Commonwealth; and
(ii) registered in a state other than this
Commonwealth within 20 days after delivery to the vendee.
(16) The sale at retail or use of water.
(17) As follows:
(i) Except as provided under subparagraph (ii), the
sale at retail or use of all vesture, wearing apparel,
raiments, garments, footwear and other articles of
clothing, including clothing patterns and items that are
to be a component part of clothing, worn or carried on or
about the human body.
(ii) The following shall not be excluded from the
tax under this subpart:
(A) An accessory, ornamental wear, formal day or
evening apparel or article made of fur on the hide or
pelt or a material imitative of fur and an article of
which the real, imitation or synthetic fur is the
component material of chief value if the value is
more than three times the value of the next most
valuable component material.
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(B) Sporting goods and clothing not normally
used or worn by an individual who is not engaged in
sports.
(18) The sale at retail or use of religious publications
sold by religious groups, Bibles or religious articles.
(19) As follows:
(i) (A) Except as provided for under subparagraph
(ii), the sale at retail or use of food and beverages for
human consumption.
(B) The sale at retail of food and beverages at
or from a school or church in the ordinary course of
the activities of the school or church.
(ii) The exclusion under subparagraph (i)(A) shall
not apply with respect to any of the following:
(A) Soft drinks.
(B) Malt and brewed beverages and spirituous and
vinous liquors.
(C) As follows:
(I) Food or beverages, whether sold for
consumption on or off the premises, on a take-out
or to-go basis or delivered to the purchaser or
consumer if purchased from a person engaged in
the business of catering or from a person engaged
in the business of operating an establishment
where ready-to-eat food and beverages are sold.
(II) For purposes of this subclause:
(a) An establishment under subparagraph
(I) shall include a restaurant, cafe, lunch
counter, private and social club, tavern,
dining car, hotel, night club, fast food
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operation, pizzeria, fair, carnival, lunch
cart, ice cream stand, snack bar, cafeteria,
employee cafeteria, theater, stadium, arena,
amusement park, carryout shop, coffee shop or
other similar establishment, whether mobile
or immobile.
(b) A bakery, pastry shop, donut shop,
delicatessen, grocery store, supermarket,
farmer's market, convenience store or vending
machine shall not be considered an
establishment under subparagraph (I) from
which food or beverages ready-to-eat are sold
except for the sale of meals, sandwiches,
food from salad bars, hand-dipped or hand-
served ice-based products, including ice
cream and yogurt, hot soup, hot pizza and
other hot food items, brewed coffee and hot
beverages.
(c) Beverages under subparagraph (I)
shall not include malt and brewed beverages
and spirituous and vinous liquors, but shall
include soft drinks.
(20) The sale at retail or use of a newspaper, including
printed advertising materials circulated with the newspaper,
regardless of where or by whom the printed advertising
material was produced. As used in this paragraph, "newspaper"
means a legal newspaper or a publication containing matters
of general interest and reports of current events which
qualifies as a newspaper of general circulation authorized to
carry a legal advertisement as those terms are defined in 45
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Pa.C.S. § 101 (relating to definitions), not including
magazines.
(21) The sale at retail or use of a casket and burial
vault for human remains and a marker and tombstone for human
graves.
(22) The sale at retail or use of flags of the United
States of America and the Commonwealth of Pennsylvania.
(23) The sale at retail or use of textbooks for use in a
public or private school, college or university if purchased
on behalf of or through the school, college or university and
the school, college or university is recognized by the
Department of Education.
(24) The sale at retail or use of motion picture film
rented or licensed from a distributor for the purpose of
commercial exhibition.
(25) The sale at retail or use of a mail order catalog
and direct mail advertising literature or materials,
including electoral literature or materials, such as
envelopes, address labels and a one-time license to use a
list of names and mailing addresses for each delivery of
direct mail advertising literature or materials, including
electoral literature or materials, through the United States
Postal Service.
(26) The sale at retail or use of rail transportation
equipment used in the movement of personal property.
(27) The sale at retail of a bus to be used under
contract with a school district that is a replacement for a
bus destroyed or lost in the flood of 1977 for a period
ending December 31, 1977, in the counties of Armstrong,
Bedford, Cambria, Indiana, Jefferson, Somerset and
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Westmoreland, or the use of the bus.
(28) The sale at retail of a horse if, at the time of
purchase, the seller is directed to ship or deliver the horse
to an out-of-State location, whether or not the charges for
shipment are paid for by the seller or the purchaser. The
following apply:
(i) The seller shall obtain a bill of lading, either
from the carrier or from the purchaser, who, in turn, has
obtained the bill of lading from the carrier reflecting
delivery to the out-of-State address to which the horse
has been shipped. The seller shall execute a Certificate
of Delivery to Destination Outside of the Commonwealth
form for each bill of lading reflecting out-of-State
delivery. The seller shall be required to retain the
certificate of delivery form to justify the noncollection
of sales tax with respect to the transaction to which the
form relates.
(ii) In a transaction where a horse is sold by the
seller and delivered to a domiciled person, agent or
corporation prior to the horse being delivered to an out-
of-State location, the Certificate of Delivery to
Destination Outside of the Commonwealth form must have
attached to it bills of lading both for the transfer to
the domiciled person, agent or corporation and from the
domiciled person, agent or corporation to the out-of-
State location.
(29) The sale at retail or use of fish feed purchased by
or on behalf of sportsmen's clubs, fish cooperatives or
nurseries approved by the Pennsylvania Fish and Boat
Commission.
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(30) The sale at retail of supplies and materials to
tourist promotion agencies that receive grants from the
Commonwealth for distribution to the public as promotional
material or the use of the supplies and materials by a
tourist promotion agency.
(31) The sale at retail of supplies and materials to
tourist promotion agencies that receive grants from the
Commonwealth for distribution to the public as promotional
material or the use of the supplies and materials by a
tourist promotion agency.
(32) The sale or use of brook trout (salvelinus
fontinalis), brown trout (Salmo trutta) or rainbow trout
(Salmo gairdneri).
(33) The sale at retail or use of a bus to be used
exclusively for the transportation of children for school
purposes.
(34) The sale at retail or use of firewood. For the
purpose of this paragraph, "firewood" means the product of
trees when severed from the land and cut into proper lengths
for burning and pellets made from pure wood sawdust if used
for fuel for cooking or hot water production or to heat a
residential dwelling.
(35) The sale at retail or use of materials used in the
construction and erection of objects purchased by not-for-
profit organizations for purposes of commemoration and
memorialization of historical events, if the object is
erected upon publicly owned property or property to be
conveyed to a public entity upon the commemoration or
memorialization of the historical event.
(36) The sale at retail or use of food or beverages or
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other tangible personal property purchased in accordance with
the Supplemental Nutrition Assistance Program (SNAP) under 7
U.S.C. Ch. 51 (relating to Supplemental Nutrition Assistance
Program).
(37) The sale at retail or use of food and beverages by
nonprofit associations which support sports programs or youth
centers. As used in this paragraph:
(i) "Nonprofit association" means an entity which is
organized as a nonprofit corporation or nonprofit
unincorporated association under the laws of this
Commonwealth or the United States or an entity which is
authorized to do business in this Commonwealth as a
nonprofit corporation or unincorporated association under
the laws of this Commonwealth, including a youth or
athletic association, volunteer fire association,
ambulance association, religious organization, charitable
organization, fraternal organization, veterans
organization, civic association and a separately
chartered auxiliary of the association or organization,
if organized and operated on a nonprofit basis.
(ii) "Sports program" means baseball, softball,
football, basketball, soccer and any other competitive
sport formally recognized as a sport by the United States
Olympic Committee as specified by and under the
jurisdiction of 36 U.S.C. Ch. 2205 (relating to United
States Olympic and Paralympic Committee), the Amateur
Athletic Union or the National Collegiate Athletic
Association. The term shall be limited to a program or a
portion of a program that is organized for recreational
purposes and whose activities are substantially for those
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purposes and which is primarily for participants who are
18 years of age or younger or whose 19th birthday occurs
during the year of participation or the competitive
season, whichever is longer. There shall be no age
limitation for a program operated for persons with a
physical or intellectual disability.
(iii) "Support" means:
(A) that the funds raised from sales are used to
pay the expenses of a sports program or a youth
center; or
(B) the nonprofit association sells food and
beverages at a youth center or a location where a
sports program is being conducted under this subpart.
(iv) "Youth center" means a fixed location used
exclusively for programs for individuals who are 19 years
of age or younger as long as the programs are:
(A) conducted primarily by volunteers;
(B) designed to advance recreational, civic or
moral objectives; and
(C) conducted by an organization that is
qualified under section 501(C)(3) of the Internal
Revenue Code of 1986 (26 U.S.C. § 501(c)(3) (relating
to exemption from tax on corporations, certain
trusts, etc.)) and that has obtained an exemption
number from the department as a charitable
organization under paragraph (6).
(38) The sale at retail or use of a subscription for a
magazine, including printed advertising materials circulated
with the periodical or publication, regardless of where or by
whom the printed advertising material was produced. As used
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in this paragraph, "magazine" means a periodical published at
regular intervals not exceeding three months, which is
circulated among the general public, containing matters of
general interest and reports of current events published for
the purpose of disseminating information of a public
character or devoted to literature, the sciences, art or some
special industry.
(39) The sale at retail or use of an interior office
building cleaning service, but only as it relates to the
costs of the supplied employee, including wages, salaries,
bonuses and commissions, employment benefits, expense
reimbursements and payroll and withholding taxes, to the
extent that these costs are specifically itemized or that
these costs in aggregate are stated in billings from the
seller or supplying entity.
(40) The sale at retail or use of candy or gum
regardless of the location from which the candy or gum is
sold.
(41) The sale at retail or use of a horse to be used
exclusively for commercial racing activities and the sale at
retail and use of feed, bedding, grooming supplies, riding
tack, farrier services, portable stalls and sulkies for a
horse used exclusively for commercial racing activities.
(42) The sale at retail or use of tangible personal
property or services used, transferred or consumed in
installing or repairing equipment or a device designed to
assist a person in ascending or descending a stairway when
all of the following conditions are met:
(i) The equipment or device is used by a person who,
by virtue of a physical disability, is unable to ascend
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or descend stairs without the aid of the equipment or
device.
(ii) The equipment or device is installed or used in
the person's place of residence.
(iii) A physician has certified the physical
disability of the person in whose residence the equipment
or device is installed or used.
(43) The sale at retail to or use by a construction
contractor of building machinery and equipment and services
that are transferred:
(i) under a construction contract for a charitable
organization, volunteer firefighters' organization,
volunteer firefighters' relief association, nonprofit
educational institution or religious organization for
religious purposes, if the building machinery and
equipment and services are not used in any unrelated
trade or business; or
(ii) to the United States or the Commonwealth or its
instrumentalities or political subdivisions.
(44) (Reserved).
(45) The sale at retail or use of a mold and related
mold equipment used directly and predominantly in the
manufacture of a product, notwithstanding whether the person
that holds title to the equipment manufactures a product.
(46) The sale or use of used prebuilt housing.
(47) The sale at retail to or use of food and
nonalcoholic beverages by an airline which will transfer the
food or nonalcoholic beverages to passengers in connection
with the rendering of the airline service.
(48) The sale at retail or use of tangible personal
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property or services which are directly used in farming,
dairying or agriculture when engaged in as a business
enterprise, whether or not the sale is made to the person
directly engaged in the business enterprise or to a person
contracting with the person directly engaged in the business
enterprise for the production of food.
(49) The sale at retail or use of separately stated fees
paid under 13 Pa.C.S. § 9525 (relating to fees).
(50) The sale at retail to or use by a construction
contractor, employed by a public school district under a
construction contract, of materials and building supplies
which, during construction or reconstruction, are made part
of a public school building utilized for instructional
classroom education within this Commonwealth, if the
construction or reconstruction:
(i) is necessitated by a disaster emergency, as
defined in 35 Pa.C.S. § 7102 (relating to definitions);
and
(ii) takes place during the period when there is a
declaration of disaster emergency under 35 Pa.C.S. §
7301(c) (relating to general authority of Governor).
(51) The sale at retail or use of investment metal
bullion and investment coins. As used in this paragraph:
(i) "Investment metal bullion" means an elementary
precious metal which has been put through a process of
smelting or refining, including gold, silver, platinum
and palladium, and which is in a state or condition that
its value depends upon its content and not its form. The
term shall not include a precious metal which has been
assembled, fabricated, manufactured or processed in one
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or more specific and customary industrial, professional,
aesthetic or artistic uses.
(ii) "Investment coins" means numismatic coins or
other forms of money and legal tender manufactured of
gold, silver, platinum, palladium or other metal and of
the United States or any foreign nation with a fair
market value greater than any nominal value of such
coins. The term shall not include commemorative
medallions or jewelry or works of art made of coins.
(52) The sale at retail or use of copies of an official
document sold by a government agency or a court. As used in
this paragraph:
(i) "Court" shall include any of the following:
(A) An appellate court as defined in 42 Pa.C.S.
§ 102 (relating to definitions).
(B) A court of common pleas as defined in 42
Pa.C.S. § 102.
(C) The minor judiciary as defined in 42 Pa.C.S.
§ 102.
(ii) "Government agency" shall mean an agency as
defined in section 102 of the act of February 14, 2008
(P.L.6, No.3), known as the Right-to-Know Law.
(iii) "Official document" shall mean a record as
defined in section 102 of the Right-to-Know Law. The term
shall include notes of court testimony, a deposition
transcript, driving record, accident report, birth and
death certificate, deed, divorce decree and other similar
documents.
(53) The sale at retail or use of repair or replacement
parts or software or software upgrades, including the
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installation of those parts, software or software upgrades,
exclusively for use in a helicopter and similar rotorcraft or
a flight simulator or in the overhauling or rebuilding of a
helicopter and similar rotorcraft or a flight simulator or
helicopter and similar rotorcraft or flight simulator
components.
(54) The sale at retail or use or lease of a helicopter
or similar rotorcraft or a flight simulator, as well as
training materials, operational documents and publications
relating to the use or operation of helicopters and similar
rotorcrafts and flight simulators.
(55) The sale at retail or use of aircraft parts,
services to aircraft and aircraft components. For purposes of
this paragraph, "aircraft" shall include a fixed-wing
aircraft, powered aircraft, tilt-rotor or tilt-wing aircraft,
glider or unmanned aircraft.
(56) The sale at retail or use of services related to
the set up, tear down or maintenance of tangible personal
property rented by an authority to exhibitors at a convention
center or a public auditorium, established under any of the
following:
(i) 64 Pa.C.S. Ch. 60 (relating to Pennsylvania
Convention Center Authority).
(ii) The act of July 28, 1953 (P.L.723, No.230),
known as the Second Class County Code.
(iii) 16 Pa.C.S. (relating to counties).
(57) The sale at retail or use of food and beverages by
a volunteer firemen's organization to raise funds for the
purposes of the volunteer firemen's organization.
(58) The sale at retail of building materials and
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supplies used for the construction or repair of an animal
housing facility, regardless if the sale is made to the
purchaser directly or pursuant to a construction contract.
(59) The sale at retail or use by a financial
institution of canned computer software directly utilized in
conducting the business of banking. For the purposes of this
paragraph, the following words and phrases shall have the
following meanings:
(i) "Directly utilized in conducting the business of
banking" includes the purchase of canned computer
software by a financial institution to be used in
transactions with customers and service providers. The
term does not include the purchase of canned computer
software by entities, other than a financial institution,
such as holding companies and subsidiaries of a financial
institution.
(ii) "Financial institution" means an institution
doing business in this Commonwealth subject to the tax
imposed by Article VII or XV of the Tax Reform Code of
1971.
(60) The sale at retail or use of a multipurpose
agricultural vehicle operated for the benefit of or pursuant
to the operation of a farm owned or operated by the owner of
the vehicle or a business whose enterprises and activities
are considered part of farming. For the purposes of this
paragraph, the following words and phrases shall have the
following meanings:
(i) "Multipurpose agricultural vehicle" means a
motor vehicle exempt from registration in accordance with
75 Pa.C.S. § 1302(17) (relating to vehicles exempt from
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registration) which is 66 inches or less in width and
2,000 pounds or less in dry weight and which is used
exclusively for agricultural operations and only
incidentally operated or moved upon the highways.
(ii) "Use of a multipurpose agricultural vehicle in
farming" means repairing and maintaining buildings,
including houses, garages, barns, stables, greenhouses,
mushroom houses and storehouses, fences and stanchions,
permanently affixed to real estate, as well as
transporting farming personnel, collecting, conveying or
transporting property to be used in farming and
transporting or conveying the farm product after the
final farming operation, which includes, but does not
extend beyond, the operation of packaging for the
ultimate consumer and storage.
(61) The sale at retail or use of tangible personal
property manufactured for the purpose of initiating,
supporting or sustaining breast feeding.
(62) The sale at retail or use of services related to
the cleaning or maintenance of a storage trap utilized by a
food service or restaurant establishment to collect grease
waste.
§ 1322. Alternate imposition of tax and credits.
(a) Motor vehicle, trailer or semitrailer.--If a person
actively and principally engaged in the business of selling new
or used motor vehicles, trailers or semitrailers, and registered
with the department in the "dealer's class," acquires a motor
vehicle, trailer or semitrailer for the purpose of resale, and
prior to the resale, uses the motor vehicle, trailer or
semitrailer for a taxable use under this subpart, the person may
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elect to pay a tax equal to 6% of the fair rental value of the
motor vehicle, trailer or semitrailer during the use. This
subsection shall not apply to the use of a vehicle as a wrecker,
parts truck, delivery truck or courtesy car.
(b) Aircraft.--A commercial aircraft operator who acquires
an aircraft for the purpose of resale, or lease, or is entitled
to claim another valid exemption at the time of purchase, and
subsequent to the purchase, periodically uses the aircraft for a
taxable use under this subpart, may elect to pay a tax equal to
6% of the fair rental value of the aircraft during the use.
§ 1323. Credit against tax.
A credit against the tax imposed by Subchapter A (relating to
imposition of tax) shall be granted with respect to tangible
personal property or services purchased for use outside this
Commonwealth equal to the tax paid to another state by reason of
the imposition by the other state of a tax similar to the tax
imposed by this subpart, except that no credit shall be granted
unless the other state grants substantially similar tax relief
by reason of the payment of tax under this subpart or under the
former act of March 6, 1956 (P.L.1228, No.381), known as the Tax
Act of 1963 for Education.
SUBCHAPTER D
LICENSES
Sec.
1331. Definitions.
1332. Application.
1333. Issuance and conditions.
1334. Administrative action.
1335. Penalties.
1336. Liability.
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§ 1331. Definitions.
The following words and phrases when used in this subchapter
shall, in addition to the meaning given to them in section 1102
(relating to definitions), have the meanings given to them in
this section unless the context clearly indicates otherwise:
"Maintaining a place of business in this Commonwealth."
Being an operator as defined in section 1341 (relating to
definitions).
"Sale." The providing of occupancy to an occupant by an
operator, as those terms are defined in section 1341.
"Services." Occupancy as defined in section 1341.
"Tangible personal property." Occupancy as defined in
section 1341.
"Use." Occupancy as defined in section 1341.
§ 1332. Application.
A person maintaining a place of business in this
Commonwealth, with the exception of a marketplace seller who
makes no sales outside a forum for which a marketplace seller is
required to collect sales tax on the seller's behalf, and a
shared vehicle owner who makes no vehicle available for sharing
outside a forum for which a peer-to-peer car-sharing program
marketplace facilitator is required to collect sales tax on
behalf of the shared vehicle owner selling or leasing services
or tangible personal property, the sale or use of which is
subject to tax, and who has not yet obtained a license from the
department, shall, prior to the beginning of business, make
application to the department, on a form prescribed by the
department, for a license. If the person maintains more than one
place of business in this Commonwealth, the license shall be
issued for the principal place of business in this Commonwealth.
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§ 1333. Issuance and conditions.
(a) Issuance.--After the receipt of an application, the
department shall issue the license applied for under section
1332 (relating to application) if the applicant has filed all
required State tax reports and paid any State taxes not subject
to a timely perfected administrative or judicial appeal or
subject to a duly authorized deferred payment plan.
(b) Nonassignability.--A license under this subchapter shall
be nonassignable.
(c) Renewal.--All licensees as of August 4, 1991, shall be
required to file for renewal of the license on or before January
31, 1992. Licenses issued through April 30, 1992, shall be based
on a staggered renewal system established by the department. Any
license issued after April 30, 1992, shall be valid for a period
of five years.
§ 1334. Administrative action.
(a) Authorization.--If an applicant for a license or a
person holding a license has not filed all required State tax
reports and paid any State taxes not subject to a timely
perfected administrative or judicial appeal or subject to a duly
authorized deferred payment plan, the department may refuse to
issue, may suspend or may revoke the license.
(b) Notification.--
(1) The department shall notify the applicant or
licensee of any refusal, suspension or revocation.
(2) The notice shall contain a statement that the
refusal, suspension or revocation may be made public.
(3) The notice shall be made by first class mail.
(c) Appeal.--
(1) An applicant or licensee aggrieved by the
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determination of the department may file an appeal pursuant
to the provisions for administrative appeals in this subpart,
except that the appeal must be filed within 30 days of the
date of the notice.
(2) In the case of a suspension or revocation which is
appealed, the license shall remain valid pending a final
outcome of the appeals process.
(3) Notwithstanding sections 1596 (relating to
unauthorized disclosure) and 2817(f) (relating to crimes) and
sections 408(b), 603, 702, 802, 904 and 1102 of the Tax
Reform Code of 1971 or any other provision of law to the
contrary, if no appeal is taken or if an appeal is taken and
denied at the conclusion of the appeal process, the
department may disclose, by publication or otherwise, the
identity of a person and the fact that the person's license
has been refused, suspended or revoked under this section.
Disclosure may include the basis for refusal, suspension or
revocation.
§ 1335. Penalties.
(a) Fine and imprisonment.--A person that maintains a place
of business in this Commonwealth for the purpose of selling or
leasing services or tangible personal property, the sale or use
of which is subject to tax, without having a valid license at
the time of the sale or lease, shall be guilty of a summary
offense and, upon conviction, be sentenced to pay a fine of not
less than $300 nor more than $1,500 and, in default of the fine,
to undergo imprisonment of not less than five days nor more than
30 days.
(b) Nature of penalties.--The penalties imposed by this
section shall be in addition to any other penalties imposed by
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this subpart.
(c) Separate violations.--For purposes of this section, the
offering for sale or lease of any service or tangible personal
property, the sale or use of which is subject to tax, during any
calendar day shall constitute a separate violation.
(d) Enforcement.--The secretary may designate employees of
the department to enforce the provisions of this section. The
employees shall exhibit proof of and be within the scope of the
designation when instituting proceedings as provided by the
Pennsylvania Rules of Criminal Procedure.
§ 1336. Liability.
Failure of a person to obtain a license shall not relieve
that person of liability to pay the tax imposed by this subpart.
SUBCHAPTER E
HOTEL OCCUPANCY TAX
Sec.
1341. Definitions.
1342. Imposition of tax.
1343. Collection of tax.
1344. Seasonal tax returns.
1345. Tourism Promotion Fund.
§ 1341. Definitions.
The following words and phrases when used in this subchapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Accommodation fee." The amount by which the rent exceeds the
discount room charge, if any.
"Booking agent." A person or entity which facilitates or
collects payment for hotel accommodations on behalf of or for an
operator. The term "booking agent" shall not include a person
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who merely publishes advertisements for accommodations.
"Discount room charge." The amount charged by an operator to
a booking agent in connection with the sale of an accommodation
by the booking agent .
"Hotel." As follows:
(1) A building or buildings in which the public may, for
a consideration, obtain sleeping accommodations.
(2) The term shall not include a charitable, educational
or religious institution summer camp for children, hospital
or nursing home.
"Occupancy." The use or possession or the right to the use
or possession by a person, other than a permanent resident, of a
room or rooms in a hotel for any purpose or the right to the use
or possession of the furnishings or to the services and
accommodations accompanying the use and possession of the room
or rooms.
"Occupant." As follows:
(1) A person who, for a consideration, uses or possesses
or has a right to use or possess a room or rooms in a hotel
under a lease, concession, permit, right of access, license
or agreement.
(2) The term shall not include a permanent resident.
"Operator." A person operating a hotel or acting as a
booking agent.
"Permanent resident." An occupant who has occupied or has
the right to occupancy of a room or rooms in a hotel for at
least 30 consecutive days.
"Rent." As follows:
(1) Any of the following:
(i) The consideration received for occupancy valued
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in money, whether received in money or otherwise,
including all receipts, cash, credits and property or
services of any kind or nature.
(ii) Accommodation fees.
(iii) An amount for which the occupant is liable for
the occupancy without any deduction from the amount,
including an amount charged by a booking agent.
(2) The term shall not include a gratuity.
§ 1342. Imposition of tax.
(a) General rule.--An excise tax of 6% of the rent is
imposed upon every occupancy of a room or rooms in a hotel in
this Commonwealth.
(b) Booking agent.--If a booking agent acting for an
operator collects payment for rent, the booking agent must
collect and remit the following:
(1) The tax imposed under this section.
(2) Any additional or optional hotel tax imposed under:
(i) The act of June 5, 1991 (P.L.9, No.6), known as
the Pennsylvania Intergovernmental Cooperation Authority
Act for Cities of the First Class.
(ii) The act of December 21, 1998 (P.L.1307,
No.174), known as the Community and Economic Improvement
Act.
(iii) 64 Pa.C.S. Ch. 60 (relating to Pennsylvania
Convention Center Authority);
(iv) 16 Pa.C.S. Chs. 149 (relating to fiscal
affairs) and 161 (relating to grounds and buildings).
(v) The act of July 28, 1953 (P.L.723, No.230),
known as the Second Class County Code.
(c) Deposit into Tourism Promotion Fund.--Notwithstanding
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any provision of law to the contrary, the following shall apply:
(1) The collected and remitted tax imposed under
subsection (b)(1) shall be deposited into the Tourism
Promotion Fund established under section 1345 (relating to
Tourism Promotion Fund).
(2) The collected and remitted tax imposed under
subsection (b)(2) shall be deposited in accordance with a
county ordinance.
(d) Accommodation fee.--An operator shall not be liable for
tax owed regarding an accommodation fee.
(e) Disclosure.--A booking agent shall not be required to
separately disclose to an occupant the amount of the tax imposed
that relates to a discount room charge versus an accommodation
fee.
§ 1343. Collection of tax.
The tax under this subchapter shall be collected by the
operator from the occupant and paid over to the Commonwealth as
provided in this subpart.
§ 1344. Seasonal tax returns.
Notwithstanding any other provisions in this subpart, the
department may, by regulation, waive the requirement for the
filing of quarterly returns in the case of an operator whose
hotel is operated only during certain seasons of the year, and
may provide for the filing of returns by persons at times other
than those provided by Subchapter C of Chapter 15 (relating to
payment of tax).
§ 1345. Tourism Promotion Fund.
(a) Establishment.--A restricted revenue account is
established within the Treasury Department to be known as the
Tourism Promotion Fund.
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(b) Taxes and appropriation.--The tax collected by a booking
agent on accommodation fees under section 1342 (relating to
imposition of tax) shall be deposited into the Tourism Promotion
Fund and disbursed upon appropriation for the purpose of
promoting tourism in this Commonwealth.
(c) Department duties.--The Department of Community and
Economic Development shall promulgate guidelines, rules and
regulations as necessary to achieve the purpose of promoting
tourism in this Commonwealth.
(d) Exceptions.--Money from the fund may not be used for the
promotion or marketing operations of a tourism entity or for
special events or grants until 30 days after the publication of
the guidelines, rules and regulations under subsection (c) in
the Pennsylvania Bulletin.
(e) Amount of funds.--
(1) No more than 50% of the funds available for
disbursement under subsection (b) may be distributed for the
purposes of promotion or marketing operations of a tourism
entity or for special events or grants.
(2) Funding for the promotion or marketing operations of
a tourism entity, special events or grants shall require a
50% cash or in-kind match.
(3) A single recipient of funding under paragraph (2)
may not be awarded more than 15% of the total funds available
for disbursement under subsection (b). This paragraph shall
not apply to contracts entered into by the department for
Statewide tourism promotion or marketing.
(f) Restrictions.--Funds available for disbursement under
subsection (b) may not be used for capital projects or for the
design, construction, rehabilitation, repair, installation or
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purchase of any building, structure or sign in this
Commonwealth.
(g) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Promoting tourism." Activities and expenditures designed to
increase tourism, including:
(1) Advertising, publicizing or otherwise distributing
information for the purpose of attracting and welcoming
tourists.
(2) Developing strategies to expand tourism.
(3) Funding the promotion or marketing operations of a
tourism entity .
(4) Funding marketing and operations of special events
and festivals designed to attract tourists.
"Tourism entity." A "tourism promotion agency" as defined in
section 2 of the act of July 4, 2008 (P.L.621, No.50), known as
the Tourism Promotion Act, destination marketing organization or
regional attractions marketing agency.
SUBCHAPTER F
REMOTE SELLERS
Sec.
1351. Definitions.
1352. Election.
1353. Notice requirements.
1354. Reports to purchasers and marketplace sellers.
1355. Reports to department.
1356. Liability and penalties.
1357. Application.
1358. Transfer to county sales and use tax accounts.
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§ 1351. Definitions.
The following words and phrases when used in this subchapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Affiliated person." A person that, with respect to another
person:
(1) has a direct or indirect ownership interest of more
than 5% in the other person; or
(2) is related to the other person because a third
person, or group of third persons who are affiliated with
each other as provided in this definition, holds a direct or
indirect ownership interest of more than 5% in the related
person.
"Forum." A place where sales at retail occur, whether
physical or electronic. The term includes a store, booth,
publicly accessible Internet website, catalog or similar place.
"Marketplace facilitator." As follows:
(1) A person that facilitates a sale at retail of
tangible personal property. For purposes of this definition,
a person facilitates a sale at retail if the person or an
affiliated person:
(i) lists or advertises tangible personal property
for sale at retail in any forum; and
(ii) directly or indirectly through agreements or
arrangements with third parties collects the payment from
the purchaser and transmits the payment to the person
selling the property.
(2) The term shall include a person that may also be a
vendor.
"Marketplace seller." A person that has an agreement with a
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marketplace facilitator pursuant to which the marketplace
facilitator facilitates sales for the person.
"Notice and reporting requirements." The notice requirements
under section 1353 (relating to notice requirements) and the
reporting requirements under sections 1354 (relating to reports
to purchasers and marketplace sellers) and 1355 (relating to
reports to department).
"Referral." The transfer by a referrer of a potential
purchaser to a person that advertises or lists products for sale
on the referrer's platform.
"Referrer." As follows:
(1) A person, other than a person engaging in the
business of printing or publishing a newspaper, that,
pursuant to an agreement or arrangement with a marketplace
seller or remote seller, does all of the following:
(i) Agrees to list or advertise for sale at retail
one or more products of the marketplace seller or remote
seller in a physical or electronic medium.
(ii) Receives consideration from the marketplace
seller or remote seller from the sale offered in the
listing or advertisement.
(iii) Transfers by telecommunications, Internet link
or other means, a purchaser to a marketplace seller,
remote seller or affiliated person to complete a sale.
(iv) Does not collect a receipt from the purchaser
for the sale.
(2) The term shall include a person that may also be a
vendor.
(3) The term shall not include a person that:
(i) provides Internet advertising services; and
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(ii) does not provide the marketplace seller's or
remote seller's shipping terms or advertise whether a
marketplace seller or remote seller collects a sales or
use tax.
"Remote seller." A person, other than a marketplace
facilitator, marketplace seller or referrer, that does not
maintain a place of business in this Commonwealth that, through
a forum, sells tangible personal property at retail, the sale or
use of which is subject to the tax imposed by this chapter. The
term does not include an employee who in the ordinary scope of
employment renders services to the employee's employer in
exchange for wages and salaries.
§ 1352. Election.
(a) Duty.--Subject to subsections (c) and (d), on or before
March 1, 2018, and on or before June 1 of each calendar year
thereafter, beginning June 1, 2019, a remote seller, marketplace
facilitator or referrer that had aggregate sales at retail of
tangible personal property subject to tax under this subpart
within this Commonwealth or delivered to locations within this
Commonwealth worth at least $10,000 during the immediately
preceding 12-calendar-month period shall file an election with
the department to collect and remit the tax imposed under this
subchapter or to comply with the notice and reporting
requirements. The election shall be made on a form and in a
manner prescribed by the department and, except as provided
under subsection (e), shall apply to the next succeeding fiscal
year.
(b) License.--A remote seller, marketplace facilitator or
referrer that makes an election under subsection (a) to collect
and remit the tax imposed under this subchapter shall obtain a
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license under Subchapter D (relating to licenses).
(c) Applicability for marketplace facilitator.--The
requirement by a marketplace facilitator to make an election
under subsection (a) shall only apply to the following:
(1) Sales at retail through the marketplace
facilitator's forum made by or on behalf of a marketplace
seller that does not maintain a place of business in this
Commonwealth.
(2) S ales at retail made by a marketplace facilitator on
its own behalf if the marketplace facilitator does not
maintain a place of business in this Commonwealth.
(d) Applicability for referrer.--
(1) The requirement by a referrer to make an election
under subsection (a) shall only apply to sales at retail:
(i) directly resulting from a referral of a
purchaser to a marketplace seller that does not maintain
a place of business in this Commonwealth;
(ii) d irectly resulting from a referral of a
purchaser to a remote seller; and
(iii) of the referrer's own products if the referrer
does not maintain a place of business in this
Commonwealth.
(2) A referrer may make an election under subsection (a)
for the sales described under paragraph (1)(i) and (ii) that
is different from the election made for the sales described
under paragraph (1)(iii).
(e) Effective period and change of election.--An election
made on or before March 1, 2018, shall be in effect for the
balance of the 2017-2018 fiscal year and for the 2018-2019
fiscal year. A remote seller, marketplace facilitator or
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referrer may change an election to comply with the notice and
reporting requirements to an election to collect and remit the
tax imposed under this subchapter at any time during a fiscal
year by filing a new election with the department and obtaining
a license under Subchapter D. The new election shall be
effective 30 days after the filing and shall be effective for
the balance of the fiscal year in which the new election was
filed and for the next succeeding fiscal year.
(f) Deemed compliance.--A remote seller, marketplace
facilitator or referrer who does not submit an election under
subsection (a) or a new election under subsection (e) shall be
deemed to have elected to comply with the notice and reporting
requirements.
(g) Additional requirements.--In addition to records that
may be required to be maintained under other applicable
provisions of this subpart by a remote seller, a marketplace
facilitator or referrer, remote seller, marketplace facilitator
or referrer subject to this subpart shall also be subject to
sections 1592 (relating to keeping of records) and 1594
(relating to examinations).
§ 1353. Notice requirements.
(a) Compliance.--A remote seller, marketplace facilitator or
referrer required to make an election under section 1352
(relating to election) that does not elect to collect and remit
the tax imposed by this subchapter shall comply with the
applicable notice requirements of this section.
(b) Notice by remote seller or marketplace facilitator.--
(1) A remote seller or marketplace facilitator subject
to the requirements of this section shall:
(i) Post a conspicuous notice on its forum that
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informs purchasers intending to purchase tangible
personal property for delivery to a location within this
Commonwealth that includes all of the following:
(A) S ales or use tax may be due in connection
with the purchase and delivery of the tangible
personal property.
(B) The Commonwealth requires the purchaser to
file a return if use tax is due in connection with
the purchase and delivery.
(C) The notice is required by this section.
(ii) Provide a written notice to each purchaser at
the time of each sale at retail that includes all of the
following:
(A) A statement that sales tax is not being
collected in connection with the purchase.
(B) A statement that the purchaser may be
required to remit use tax directly to the department.
(C) Instructions for obtaining additional
information from the department regarding whether and
how to remit use tax to the department.
(2) The notice required by paragraph (1)(ii) must be
prominently displayed on all invoices and order forms and on
each sales receipt or similar document, whether in paper or
electronic form, provided to the purchaser. No statement that
sales or use tax is not imposed on a transaction may be made
by a remote seller or marketplace facilitator unless the
transaction is exempt from sales and use tax under this
subpart or other applicable Commonwealth law.
(c) Notice by referrer.--
(1) A referrer subject to the requirements of this
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section shall post a conspicuous notice on its platform that
informs purchasers intending to purchase tangible personal
property for delivery to a location within this Commonwealth
that includes all of the following:
(i) Sales or use tax may be due in connection with
the purchase and delivery.
(ii) T he person to which the purchaser is being
referred may or may not collect and remit sales tax to
the department in connection with the transaction.
(iii) The Commonwealth requires the purchaser to
file a return if use tax is due in connection with the
purchase and delivery and not collected by the person.
(iv) The notice is required by this section.
(v) Instructions for obtaining additional
information from the department regarding whether and how
to remit sales or use tax to the department.
(vi) If the person to whom the purchaser is being
referred does not collect sales tax on a subsequent
purchase by the purchaser, the person may be required to
provide information to the purchaser and the department
about the purchaser's potential sales or use tax
liability.
(2) The notice required under paragraph (1) must be
prominently displayed and may include pop-up boxes or
notification by other means that appears when the referrer
transfers a purchaser to another person to complete the sale.
§ 1354. Reports to purchasers and marketplace sellers.
(a) Contents.--A remote seller or marketplace facilitator
required to make an election under section 1352(a) (relating to
election) that does not elect to collect and remit the tax
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imposed by this subchapter shall, no later than January 31 of
each year, provide a written report to each purchaser required
to receive the notice under section 1353(b)(1)(ii) (relating to
notice requirements) during the immediately preceding calendar
year that includes all of the following:
(1) A statement that the remote seller or marketplace
facilitator did not collect sales tax in connection with the
purchaser's transactions with the remote seller or
marketplace facilitator and that the purchaser may be
required to remit use tax to the department.
(2) A list, by date, indicating the type and purchase
price of each product purchased or leased by the purchaser
from the remote seller or marketplace facilitator and
delivered to a location within this Commonwealth.
(3) Instructions for obtaining additional information
from the department regarding whether and how to remit use
tax to the department.
(4) A statement that the remote seller or marketplace
facilitator is required to submit a report to the department
under section 1355 (relating to reports to department) that
includes the name of the purchaser and the aggregate dollar
amount of the purchaser's purchases from the remote seller or
marketplace facilitator.
(5) Additional information as the department may
reasonably require.
(b) Form.--The department shall prescribe the form of the
report required under subsection (a) and shall make the form
available on its publicly accessible Internet website.
(c) Transmittal.--The report required under subsection (a)
shall be mailed by first class mail in an envelope prominently
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marked with words indicating that important tax information is
enclosed to the purchaser's billing address, if known, or, if
unknown, to the purchaser's shipping address. If the purchaser's
billing and shipping addresses are unknown, the report shall be
sent electronically to the purchaser's last known e-mail address
with a subject heading indicating that important tax information
is being provided.
(d) Notice.--A referrer required to make an election under
section 1352(a) that does not elect to collect and remit the tax
imposed by this subchapter shall, no later than January 31 of
each year, provide a written notice to each remote seller to
whom the referrer transferred a potential purchaser located in
this Commonwealth during the immediately preceding calendar year
that includes all of the following:
(1) A statement that a sales or use tax may be imposed
by the Commonwealth on the transaction.
(2) A statement that the remote seller may be required
to make the election required by section 1352(a).
(3) Instructions for obtaining additional information
regarding sales and use tax from the department.
§ 1355. Reports to department.
(a) Contents.--A remote seller or marketplace facilitator
required to make an election under section 1352(a) (relating to
election) that does not elect to collect and remit the tax
imposed by this subchapter shall, no later than January 31 of
each year, submit a report to the department. The report shall
include, with respect to each purchaser required to receive the
notice under section 1353(b)(1)(ii) (relating to notice
requirements) during the immediately preceding calendar year,
the following:
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(1) The purchaser's name.
(2) The purchaser's billing address and, if different,
the purchaser's last known mailing address.
(3) The address within this Commonwealth to which
products were delivered to the purchaser.
(4) The aggregate dollar amount of the purchaser's
purchases from the remote seller or marketplace facilitator.
(5) The name and address of the remote seller,
marketplace facilitator or marketplace seller that made the
sales to the purchaser.
(b) Report and contents.--A referrer required to make an
election under section 1352(a) that does not elect to collect
and remit the tax imposed by this subchapter shall, no later
than January 31 of each year, submit a report to the department.
The report shall include a list of persons who received the
notice required under section 1354(d) (relating to reports to
purchasers and marketplace sellers).
(c) Forms and availability.--The department shall prescribe
the forms of the reports required under this section and shall
make them available on its publicly accessible Internet website.
The reports shall be submitted electronically in a manner as the
department shall require.
(d) Submission and statement.--A report required under this
section shall be submitted by an officer of the remote seller,
marketplace facilitator or referrer and shall include a
statement, made under penalty of perjury, by the officer that
the remote seller, marketplace facilitator or referrer made
reasonable efforts to comply with the notice and reporting
requirements of this subpart.
§ 1356. Liability and penalties.
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(a) Assessment.--The department shall assess a penalty in
the amount of $20,000 or 20% of total sales in Pennsylvania
during the previous 12 months, whichever is less, against a
remote seller, marketplace facilitator or referrer that makes an
election under section 1352(a) (relating to election) to comply
with the notice and reporting requirements, or is deemed to have
made such election under section 1352(f), and fails to comply
with the requirements under section 1354 (relating to reports to
purchasers and marketplace sellers) or 1355 (relating to reports
to department). The penalty shall be assessed separately for
each violation but may only be assessed once in a calendar year.
(b) Subject to penalties.--A remote seller, marketplace
facilitator or referrer that makes an election under section
1352(a) to collect and remit the tax imposed under this
subchapter shall be subject to all of the provisions of this
part with respect to the collection and remittance of the tax
and shall be subject to all of the penalties, interest and
additions for failing to comply with the provisions of this
subpart except as provided in this section.
(c) Abatement.--The department may abate or reduce any
penalties or addition imposed under subsection (b) due to
hardship or for good cause shown for a period which ends as
follows:
(1) Except as otherwise provided under paragraph (2),
February 1, 2027.
(2) For tangible personal property described under
paragraph (2) of the definition of "tangible personal
property" under section 1102 (relating to definitions),
February 1, 2028.
(d) Relief from liability.--A marketplace facilitator or
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referrer is relieved of liability under subsection (b) if the
marketplace facilitator or referrer can show to the satisfaction
of the department that the failure to collect the correct amount
of tax was due to incorrect information given to the marketplace
facilitator or referrer by a marketplace seller or remote
seller.
(e) Class action.--A class action may not be brought against
a marketplace facilitator or referrer on behalf of purchasers
arising from or in any way related to an overpayment of sales or
use tax collected by the marketplace facilitator or referrer,
regardless of whether the action is characterized as a tax
refund claim. Nothing in this subsection shall affect a
purchaser's right to seek a refund from the department under
other provisions of this subpart.
§ 1357. Application.
Nothing in this section shall affect the obligations of a
vendor to register with the department and to collect and remit
sales tax or use tax.
§ 1358. Transfer to county sales and use tax accounts.
Beginning October 1, 2029, 2% of the tax imposed under
Subchapter A (relating to imposition of tax) that is collected
and remitted by a remote seller, a marketplace facilitator or a
referrer shall be transferred to the School District Property
Tax Elimination Fund and credited under 53 Pa.C.S. § 90A52
(relating to payments to counties) to the respective county
sales and use tax accounts in the same proportion that each
county's receipts under section 90A22 (relating to imposition)
bears to the total receipts under section 90A22 for all
counties. The amount transferred shall include interest and
penalties, less any collection costs allowed and any refunds and
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credits paid.
CHAPTER 15
PROCEDURE AND ADMINISTRATION
Subchapter
A. Preliminary Provisions
B. Returns
C. Payment of Tax
D. Assessment and Collection of Tax
E. Refunds and Credits
F. Limitations
G. Interest, Additions, Penalties and Crimes
H. Enforcement and Examinations
I. Miscellaneous Provisions
SUBCHAPTER A
PRELIMINARY PROVISIONS
Sec.
1501. Definitions.
§ 1501. Definitions.
The following words and phrases when used in this chapter
shall, in addition to the meaning given to them in section 1102
(relating to definitions), have the meanings given to them in
this section unless the context clearly indicates otherwise:
"Maintaining a place of business in this Commonwealth."
Being an operator as defined in section 1341 (relating to
definitions).
"Purchase price." Rent as defined in section 1341.
"Purchaser." An occupant as defined in section 1341.
"Sale." The providing of occupancy to an occupant by an
operator, as those terms are defined in section 1341.
"Services." Occupancy as defined in section 1341.
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"Tangible personal property." Occupancy as defined in
section 1341.
"Use." Occupancy as defined in section 1341.
"Vendor" An operator as defined in section 1341.
SUBCHAPTER B
RETURNS
Sec.
1511. Persons required to make returns.
1512. Form of returns.
1513. Time for filing returns.
1514. Extension of time for filing returns.
1515. Place for filing returns.
1516. Timely mailing treated as timely filing and payment.
§ 1511. Persons required to make returns.
Every person required to pay tax to the department or collect
and remit tax to the department, but not including a marketplace
seller who solely makes sales through a marketplace facilitator
that is required to collect sales tax on the seller's behalf and
receives a certification from the marketplace facilitator that
the marketplace facilitator will collect, report and remit the
proper sales tax, shall file returns with respect to the tax.
§ 1512. Form of returns.
The returns required by section 1511 (relating to persons
required to make returns) shall be on forms prescribed by the
department and shall show the information with respect to the
taxes imposed by this subpart as the department may reasonably
require.
§ 1513. Time for filing returns.
(a) Quarterly and monthly returns.--
(1) For the calendar year 1971, and in each year
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thereafter, a return shall be filed quarterly by every
licensee on or before the 20th day of April, July, October
and January for the three months ending the last day of
March, June, September and December.
(2) For the calendar year 1971, and in each year
thereafter, a return shall be filed monthly with respect to
each month by every licensee whose actual tax liability for
the third calendar quarter of the preceding year equals or
exceeds $600 and is less than $25,000. The return shall be
filed on or before the 20th day of the next succeeding month
with respect to which the return is made. A licensee required
to file monthly returns under this section shall be relieved
from filing quarterly returns.
(3) With respect to every licensee whose actual tax
liability for the third calendar quarter of the preceding
year equals or exceeds $25,000 and is less than $100,000, the
licensee shall, on or before the 20th day of each month, file
a single return consisting of all of the following:
(i) Either of the following:
(A) An amount equal to 50% of the licensee's
actual tax liability for the same month in the
preceding calendar year if the licensee was a monthly
filer or, if the licensee was a quarterly or semi-
annual filer, 50% of the licensee's average actual
tax liability for that tax period in the preceding
calendar year. The following shall apply:
(I) The average actual tax liability shall
be the actual tax liability for the tax period
divided by the number of months in that tax
period.
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(II) For licensees that were not in business
during the same month in the preceding calendar
year or were in business for only a portion of
that month, the amount shall be 50% of the
average actual tax liability for each tax period
the licensee has been in business.
(III) If the licensee is filing a tax
liability for the first time with no preceding
tax periods, the amount shall be zero.
(B) An amount equal to or greater than 50% of
the licensee's actual tax liability for the same
month.
(ii) An amount equal to the taxes due for the
preceding month, less any amounts paid in the preceding
month as required by subparagraph (i).
(4) With respect to each month by every licensee whose
actual tax liability for the third calendar quarter of the
preceding year equals or exceeds $100,000, the licensee
shall, on or before the 20th day of each month, file a single
return consisting of the amounts under paragraph (3)(i)(A)
and (ii).
(5) The amount due under paragraph (3)(i) or (4) shall
be due the same day as the remainder of the preceding month's
tax.
(6) The department shall determine whether the amounts
reported under paragraph (3) or (4) shall be remitted as one
combined payment or as two separate payments.
(7) The department may require the filing of the returns
and the payments for these types of filers by electronic
means approved by the department.
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(8) A licensee filing returns under paragraph (3) or (4)
shall be relieved of filing quarterly returns.
(9) If a licensee required to remit payments under
paragraph (3) or (4) fails to make a timely payment or makes
a payment which is less than the required amount, the
department may, in addition to any applicable penalties,
impose an additional penalty equal to 5% of the amount due
under paragraph (3) or (4) which was not timely paid. The
penalty under this paragraph shall be determined when the tax
return is filed for the tax period.
(b) Annual returns.--
(1) For the calendar year 1971, and for each year
thereafter, no annual return shall be filed, except as may be
required by rules and regulations of the department
promulgated and published at least 60 days prior to the end
of the year with respect to which the returns are made.
(2) If annual returns are required, licensees shall not
be required to file returns prior to the 20th day of the year
succeeding the year with respect to which the returns are
made.
(c) Other returns.--A person, other than a licensee, liable
to pay to the department a tax under this subpart shall file a
return on or before the 20th day of the month succeeding the
month in which the person becomes liable for the tax.
(d) Small taxpayers.--The department, by regulation, may
waive the requirement for the filing of a quarterly return in
the case of a licensee whose individual tax collections do not
exceed $75 per calendar quarter and may provide for reporting on
a less frequent basis in such cases.
§ 1514. Extension of time for filing returns.
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(a) General rule.--Except as provided under subsection (b),
the department may, on written application and for good cause
shown, grant a reasonable extension of time for filing a return
required under this subpart.
(b) Exception.--The time for making a return shall not be
extended for more than three months.
§ 1515. Place for filing returns.
Returns shall be filed with the department at its main office
or at a branch office which the department may designate for
filing returns.
§ 1516. Timely mailing treated as timely filing and payment.
(a) Postmark.--Notwithstanding the provisions of any State
tax law, whenever a report or payment of all or any portion of a
State tax is required by law to be received by the department or
other agency of the Commonwealth on or before a day certain, the
taxpayer shall be deemed to have complied with the law if the
letter transmitting the report or payment of the tax which has
been received by the department is postmarked by the United
States Postal Service on or prior to the final day on which the
payment is to be received.
(b) Evidence.--For the purposes of this subpart,
presentation of a receipt indicating that the report or payment
was mailed by registered or certified mail on or before the due
date shall be evidence of timely filing and payment.
SUBCHAPTER C
PAYMENT OF TAX
Sec.
1521. Payment.
1522. Time of payment.
1523. Other times for payment.
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1524. Place for payment.
1525. Tax held in trust for Commonwealth.
1526. Discount.
§ 1521. Payment.
When a return of tax is required under this subpart, the
person required to make the return shall pay the tax to the
department.
§ 1522. Time of payment.
(a) Monthly and quarterly payments.--The tax imposed by this
subpart and incurred or collected by a licensee shall be due and
payable by the licensee on the day the return is required to be
filed under the provisions of section 1513 (relating to time for
filing returns) and payment must accompany the return.
(b) Annual payments.--If the amount of tax due for the
preceding year as shown by the annual return of a taxpayer is
greater than the amount already paid by the taxpayer in
connection with the taxpayer's monthly or quarterly returns, the
taxpayer shall send with the annual return a remittance for the
unpaid amount of tax for the year.
(c) Other payments.--A person other than a licensee liable
to pay tax under this subpart shall remit the tax at the time of
filing the return required by this subpart.
§ 1523. Other times for payment.
If the department authorizes a taxpayer to file a return at
other times than those specified under section 1513 (relating to
time for filing returns), the tax due shall be paid at the time
the return is filed.
§ 1524. Place for payment.
The tax imposed by this subpart shall be paid to the
department at the place fixed for filing the return.
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§ 1525. Tax held in trust for Commonwealth.
(a) Establishment, enforceability and good faith.--All taxes
collected by a person from purchasers in accordance with this
subpart and all taxes collected by a person from purchasers
under color of this subpart, including all taxes paid by a
person who advertises or holds out or states, directly or
indirectly, that the person will pay the tax for the purchaser,
which have not been properly refunded by the person to the
purchaser shall constitute a trust fund for the Commonwealth,
and the trust shall be enforceable against the person, the
person's representatives and any person, other than a purchaser
to whom a refund has been made properly, receiving any part of
the fund without consideration or knowing that the taxpayer is
committing a breach of trust, provided that a person receiving
payment of a lawful obligation of the taxpayer from the fund
shall be presumed to have received the payment in good faith and
without any knowledge of the breach of trust.
(b) Petition and appeal.--A person, other than a taxpayer,
against whom the department makes a claim under this section
shall have the same right to petition and appeal as is given
taxpayers by any provisions of this chapter.
§ 1526. Discount.
If a return is filed by a licensee and the tax shown to be
due on the return less any discount is paid all within the time
prescribed, the licensee shall be entitled, as compensation for
the expense of collecting and remitting the tax and as a
consideration of the prompt payment of the tax, to credit and
shall apply against the tax payable by the licensee a discount
of the lesser of:
(1) 1% of the amount of the tax collected; or
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(2) as follows:
(i) $25 per return for a monthly filer;
(ii) $75 per return for a quarterly filer; or
(iii) $150 per return for a semiannual filer.
SUBCHAPTER D
ASSESSMENT AND COLLECTION OF TAX
Sec.
1531. Assessment.
1532. Mode and time of assessment.
1533. Reassessment.
1534. Assessment to recover erroneous refunds.
1535. Burden of proof.
1536. Collection of tax.
1537. Collection of tax on motor vehicles, trailers and
semitrailers.
1538. Precollection of tax.
1539. Bulk and auction sales.
1540. Collection upon failure to request reassessment, review
or appeal.
1541. Lien for taxes.
1542. Suit for taxes.
1543. Tax suit comity.
1544. Service.
1545. Collection and payment of tax on credit sales.
1546. Prepayment of tax.
1547. Refund of sales tax attributed to bad debt.
1548. Registration of transient vendors.
1549. Bond.
1550. Notification to department and inspection of records.
1551. Seizure of property.
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1552. Fines.
1553. Transient vendors subject to subpart.
1554. Promoters.
§ 1531. Assessment.
(a) Authorization.--The department is authorized and
required to make the inquiries, determinations and assessments
of the tax imposed by this subpart. This subsection includes
interest, additions and penalties.
(b) Notice of assessment.--A notice of assessment and demand
for payment shall be mailed to the taxpayer. The notice shall
specify the basis of the assessment.
(c) Marketplace facilitator.--A marketplace facilitator is
relieved of liability under this section if the marketplace
facilitator can show to the satisfaction of the department that
the failure to collect the correct amount of tax was due to
incorrect information given to the marketplace facilitator by a
marketplace seller.
(d) Marketplace seller.--A marketplace seller is relieved of
liability under this section pertaining to those sales made
through a marketplace facilitator, when the marketplace
facilitator certifies to the seller that the marketplace
facilitator will collect, report and remit the proper sales tax,
unless the seller gave incorrect information to the marketplace
facilitator.
§ 1532. Mode and time of assessment.
(a) Underpayment of tax.--Within a reasonable time after a
return is filed, the department shall examine the return. If the
return shows a greater tax due or collected than the amount of
tax remitted with the return, the department shall issue an
assessment for the difference and 3% of the difference. The
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assessment shall be paid to the department within 10 days after
a notice of the assessment has been mailed to the taxpayer. If
the assessment is not paid within 10 days, an additional 3% of
the difference for each month during which the assessment
remains unpaid shall be added to the assessment total, but the
total of all additions shall not exceed 18% of the difference
shown on the assessment.
(b) Understatement of tax.--If the department determines
that a return of a taxpayer understates the amount of tax due,
it shall determine the proper amount and shall ascertain the
deficiency between the amount of tax shown in the return and the
amount determined. A notice of assessment for the deficiency and
the reasons for the deficiency shall be sent to the taxpayer.
The deficiency shall be paid to the department within 30 days
after a notice of the assessment has been mailed to the
taxpayer.
(c) Failure to file return.--If a taxpayer fails to file a
return required by this chapter, the department may make an
estimated assessment, based on information available, of the
proper amount of tax owed by the taxpayer. A notice of
assessment in the estimated amount shall be sent to the
taxpayer. The tax shall be paid within 30 days after a notice of
the estimated assessment has been mailed to the taxpayer.
(d) Authority to establish effective rates by business
classification.--The department may:
(1) make the studies necessary to compute effective
rates by business classification, based upon the ratio
between:
(i) the tax required to be collected; and
(ii) taxable sales; and
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(2) use the rates in computing the tax liability of a
taxpayer.
(e) Tax rate.--
(1) Except as set forth in paragraph (2), an assessment
based upon the rates shall be prima facie correct.
(2) If a taxpayer establishes that the rate is based on
a sample inapplicable to the taxpayer, the rate shall not be
considered.
§ 1533. Reassessment.
A taxpayer against whom an assessment is made may petition
the department for a reassessment under Article XXVII of the Tax
Reform Code of 1971.
§ 1534. Assessment to recover erroneous refunds.
The department may file an assessment to recover an erroneous
refund. The assessment must be filed within the later of:
(1) two years of granting a refund or credit; or
(2) the period in which an assessment could have been
filed by the department with respect to the transaction
pertaining to which the refund was granted.
§ 1535. Burden of proof.
In a petition for reassessment, review or appeal, the burden
of proof shall be upon the petitioner or appellant.
§ 1536. Collection of tax.
(a) Collection by department.--The department shall collect
the tax in the manner provided by law.
(b) Remitters.--
(1) This subsection applies to all of the following:
(i) A person that:
(A) maintains a place of business in this
Commonwealth; and
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(B) sells or leases tangible personal property
or services, with the exception of a marketplace
seller who solely makes sales through a marketplace
facilitator that is required to collect sales tax on
the marketplace seller's behalf and receives a
certification from the marketplace facilitator that
the marketplace facilitator will collect, report and
remit the proper sales tax, the sale or use of which
is subject to tax.
(ii) A person not otherwise required to collect tax
that:
(A) delivers tangible personal property to a
location within this Commonwealth; and
(B) unpacks, positions, places or assembles the
tangible personal property.
(2) Except as set forth in section 1537(a) (relating to
collection of tax on motor vehicles, trailers and
semitrailers), a person subject to paragraph (1)(i) shall:
(i) collect the tax from the purchaser or lessee at
the time of making the sale or lease; and
(ii) remit the tax to the department.
(3) All of the following apply to a person subject to
paragraph (1)(ii):
(i) The person shall collect the tax from the
purchaser at the time of delivery. The person is deemed
to be selling or leasing tangible personal property or
services, the sale or use of which is subject to the tax
imposed under this subpart.
(ii) The person shall remit the tax to the
department if:
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(A) the person delivering the tangible personal
property is responsible for collecting any portion of
the purchase price of the tangible personal property
delivered; and
(B) the purchaser has not provided the person
with proof that:
(I) the tax imposed by this chapter has been
or will be collected by the seller; or
(II) the purchaser provided the seller with
a valid exemption certificate.
(4) (i) A vendor maintaining a place of business within
this Commonwealth under paragraph (1)(vii) of the
definition of "maintaining a place of business in this
Commonwealth" under section 1102 (relating to
definitions) in calendar year 2018 shall collect sales
tax from July 1, 2019, through March 31, 2020.
(ii) A vendor maintaining a place of business within
this Commonwealth under paragraph (1)(vii) of the
definition of "maintaining a place of business in this
Commonwealth" under section 1102 in calendar years after
2018 shall collect sales tax from the second quarter,
beginning April 1, of the following calendar year through
the first quarter, ending March 31, of the next calendar
year.
(5) Each person that is required under this chapter to
collect tax from another person and that fails to collect the
proper amount of tax shall be liable for the full amount of
the tax which should have been collected.
(b.1) Collection by marketplace facilitators.--A marketplace
facilitator maintaining a place of business in this Commonwealth
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must collect and remit the sales tax on all sales, leases and
deliveries of tangible personal property, and all sales of
services, by marketplace sellers whose sales are facilitated
through the marketplace facilitator's forum.
(c) Exemption certificates.--
(1) Except as provided under paragraph (2), if the tax
does not apply to the sale or lease of tangible personal
property or services, the purchaser or lessee shall furnish
to the vendor a certificate indicating that the sale is not
legally subject to the tax. The certificate shall be in the
form prescribed by the department.
(2) An exemption certificate under paragraph (1) need
not be furnished if:
(i) the tangible personal property or service is of
a type which is never subject to the tax imposed; or
(ii) the sale or lease is in interstate commerce.
(3) If a series of transactions are not subject to tax,
a purchaser or user may furnish the vendor with a single
exemption certificate in the form, and valid for the period
of time, prescribed by the department.
(4) The department shall provide each school district
and intermediate unit with a permanent tax exemption number.
(5) An exemption certificate shall relieve the vendor
from liability under this section if the exemption
certificate:
(i) is complete and regular;
(ii) on its face discloses a valid basis of
exemption; and
(iii) is taken in good faith.
(6) An exemption certificate shall be presumed to be
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taken in good faith and the burden of proving otherwise shall
be on the department if all of the following conditions are
met:
(i) The exemption certificate is accepted by a
vendor in the ordinary course of the vendor's business.
(ii) The exemption certificate is from any of the
following:
(A) An individual domiciled within this
Commonwealth.
(B) An association, fiduciary, partnership,
corporation or other entity which:
(I) is authorized to do business within this
Commonwealth; or
(II) has an established place of business
within this Commonwealth.
(iii) The exemption certificate:
(A) on its face discloses a valid basis of
exemption consistent with the activity of the
purchaser and character of the property or service
being purchased; or
(B) is provided to the vendor by a charitable,
religious or educational association or by a
volunteer firefighters' relief association or
volunteer firemen's organization and contains the
charitable exemption number of the association or
organization.
(iv) If the purchase price is at least $200, the
exemption certificate is accompanied by a sworn
declaration, on a form provided by the department, of an
intended usage of the property or service which would
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render the usage or service nontaxable.
(c.1) Authorization to obtain information.--In lieu of the
exemption certificate required under subsection (c), the
department may authorize a vendor to obtain similarly specific
information from the vendor's purchasers. This information
includes, but is not limited to, the name and address of the
purchaser and a valid basis for exemption. The purchases made
under this subsection must be made with a verifiable source of
payment connected to the specific purchaser. The information
regarding each purchase shall be available at the time the
return is filed for the period covering the purchase. The
information shall be retained in accordance with section 1592
(relating to keeping of records). No authority shall be granted
or exercised, except upon application to and acceptance by the
department, in the department's discretion. If authority is
granted, it shall be subject to conditions specified by the
department.
(d) Direct payment permits.--
(1) The department may authorize a purchaser or lessee
to pay the tax directly to the department and waive the
collection of the tax by the vendor if the purchaser or
lessee acquires tangible personal property or services under
circumstances which make it impossible at the time of
acquisition to determine the manner in which the tangible
personal property or service will be used.
(2) Authorization under paragraph (1) requires:
(i) application to the department; and
(ii) issuance by the department of a direct payment
permit.
(3) If a direct payment permit is granted:
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(i) its use shall be subject to conditions specified
by the department; and
(ii) payment of tax on all acquisitions under the
permit shall be made directly to the department by the
permit holder.
§ 1537. Collection of tax on motor vehicles, trailers and
semitrailers.
(a) Requirement.--
(1) Notwithstanding section 1536(b)(1) (relating to
collection of tax), except as set forth in paragraph (2),
tax due on the sale at retail or use of a motor vehicle,
trailer or semitrailer required by law to be registered under
75 Pa.C.S. Ch. 13 (relating to registration of vehicles)
shall be paid by the purchaser or user directly to the
Department of Transportation under 75 Pa.C.S. § 1103.1(b)
(relating to application for certificate of title).
(2) Paragraph (1) does not apply to a mobile home.
(b) Tax paid or not due.--The Department of Transportation
may not issue a certificate of title under 75 Pa.C.S. § 1105
(relating to issuance of certificate of title) until the tax has
been paid or evidence satisfactory to the Department of
Transportation has been given to establish that tax is not due.
(c) Cancellation or suspension of certificate of title.--The
Department of Transportation may cancel or suspend a record of
certificate of title or registration of a motor vehicle, trailer
or semitrailer if the check received in payment of the tax is
not paid upon demand.
(d) First encumbrance.--The tax shall be considered as a
first encumbrance against a vehicle under subsection (a)(1), and
the vehicle may not be transferred without payment in full of
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the tax and interest or penalties which have accrued.
(e) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Mobile home." As defined in 75 Pa.C.S. § 102 (relating to
definitions).
"Motor vehicle." As defined in 75 Pa.C.S. § 102.
"Semitrailer." As defined in 75 Pa.C.S. § 102.
"Trailer." As defined in 75 Pa.C.S. § 102.
§ 1538. Precollection of tax.
(a) Precollection of tax.--
(1) Except as set forth in paragraph (2), the department
may, by regulation, authorize or require particular
categories of vendors selling tangible personal property for
resale to precollect from the purchaser the tax which the
purchaser will collect upon making a sale at retail of the
tangible personal property.
(2) The department may not require a vendor to
precollect tax from a purchaser who purchases for resale more
than $1,000 worth of tangible personal property from the
vendor per year.
(b) Licensing.--If a vendor has been authorized to prepay
the tax to the person from whom the vendor purchased the
tangible personal property for resale, the vendor prepaying the
tax may, under the regulations of the department, be relieved
from the vendor's duty to secure a license if the duty arises
only by reason of the sale of the tangible personal property
with respect to which the vendor is, under authorization of the
department, to prepay the tax.
(c) Reimbursement.--
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(1) On making a sale at retail of tangible personal
property with respect to which the vendor has prepaid the
tax, the vendor shall separately state at the time of resale
the proper amount of tax on the transaction and reimburse the
taxes which the vendor has previously prepaid.
(2) If a vendor collects a greater amount of tax in a
reporting period than the vendor had previously prepaid upon
purchase of the property with respect to which the vendor
prepaid the tax, the vendor shall file a return and remit the
balance to the Commonwealth at the time when a return would
otherwise be due with respect to the sale.
§ 1539. Bulk and auction sales.
A person is subject to section 1403 of the Fiscal Code if the
person:
(1) sells or causes to be sold at auction, or sells or
transfers in bulk, at least 51% of a stock of goods, wares,
merchandise, fixtures, machinery, equipment, buildings or
real estate involved in a business for which the person is
licensed or required to be licensed under this subpart; or
(2) is liable for filing use tax returns under this
subpart.
§ 1540. Collection upon failure to request reassessment, review
or appeal.
(a) Collection.--The department may collect a tax:
(1) If, after notice to the taxpayer, an assessment of
tax is not paid within 10 days, for assessments made under
section 1532(a) (relating to mode and time of assessment), or
30 days, for assessments made under section 1532(b), as long
as no petition for reassessment has been filed.
(2) Within 60 days from the date of reassessment, if no
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petition for review has been filed.
(3) Unless an appeal is made, within 30 days from:
(i) the date of the decision of the Board of Finance
and Revenue upon a petition for review, if no appeal has
been made; or
(ii) expiration of the board's time for acting upon
the petition, if no appeal has been made.
(4) In all cases of judicial sales, receiverships,
assignments or bankruptcies.
(b) Raising defenses.--
(1) Except as set forth in paragraph (2), in a
proceeding for the collection of tax, a taxpayer may not
raise a defense which could have been determined by the
department, the board or a court of competent jurisdiction.
(2) In a motion to stay a proceeding for the collection
of tax, a taxpayer may raise any of the following defenses:
(i) The department's failure to mail notice of
assessment or reassessment.
(ii) Payment of assessment or reassessment.
§ 1541. Lien for taxes.
(a) Lien imposed.--
(1) If a person liable to pay a tax neglects or refuses
to pay the tax, the amount, including interest, addition or
penalty, together with any other costs, shall be a lien in
favor of the Commonwealth upon the property, both real and
personal, of the person, but only after the lien has been
entered and docketed of record by the prothonotary of the
county where the property is situated.
(2) The department may, at any time, transmit to the
prothonotaries of the respective counties certified copies of
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all liens for taxes imposed by this subpart and penalties and
interest.
(3) It shall be the duty of each prothonotary receiving
the lien to enter and docket the lien of record in the
prothonotary's office, which shall be indexed as judgments
are now indexed.
(4) A prothonotary may not require, as a condition
precedent to the entry of the liens, the payment of the costs
of entering the liens into record.
(b) Priority of lien and effect on judicial sale and no
discharge by sale on junior lien.--
(1) The lien imposed under this section shall:
(i) have priority from the date of its recording;
(ii) be fully paid and satisfied out of the proceeds
of a judicial sale of property subject to the lien before
any other obligation, judgment, claim, lien or estate to
which the property may subsequently become subject,
except costs of the sale and of the writ upon which the
sale was made and real estate taxes and municipal claims
against the property; and
(iii) be subordinate to mortgages and other liens
existing and duly recorded or entered of record prior to
the recording of the tax lien.
(2) For a judicial sale of property, subject to a lien
imposed under this section on a lien or claim over which the
lien imposed under this section has priority, the sale shall
discharge the lien imposed under this section only to the
extent that the proceeds are applied to its payment, and the
lien shall continue in full force and effect as to the
balance remaining unpaid.
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(3) An inquisition or condemnation may not be made on a
judicial sale of real estate made by the Commonwealth under
this section. The following shall apply:
(i) The lien of the taxes, interest and penalties
shall continue for five years from the date of entry and
may be revived and continued in the manner provided for
renewal of judgments, on or after March 4, 1971, or as
may be provided in the Fiscal Code.
(ii) A writ of execution may directly issue on the
lien without the issuance and prosecution to judgment of
a writ of scire facias, if not less than 10 days before
issuance of an execution on the lien, notice of the
filing and the effect of the lien shall be sent by
registered mail to the taxpayer at the taxpayer's last
known post office address.
(iii) The lien shall have no effect on a stock of
goods, wares or merchandise regularly sold or leased in
the ordinary course of business by the person against
whom the lien has been entered, until a writ of execution
has been issued and a levy made upon the stock of goods,
wares and merchandise.
(c) Duty of prothonotary.--A prothonotary who willfully
fails to carry out a duty imposed under this section commits a
misdemeanor and shall, upon conviction, be sentenced to pay a
fine of $1,000 or to imprisonment for not more than one year, or
both.
(d) Priority of tax.--Except as provided in this chapter,
each tax imposed by this part which is due and unpaid and is not
collectible under section 1525 (relating to tax held in trust
for Commonwealth) shall be paid from the first money available
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for distribution in priority to each other claim and lien,
except as the laws of the United States may give a prior claim
to the Federal Government. A person charged with the
administration or distribution of a property or estate who
violates this section shall be personally liable for taxes
imposed by this part, which are accrued and unpaid and are
chargeable against the person whose property or estate is being
administered or distributed.
(e) Other remedies.--Subject to the limitations in this
subpart as to the assessment of taxes, nothing in this section
shall be construed to restrict, prohibit or limit the use by the
department in collecting taxes finally due and payable of
another remedy or procedure available at law or equity for the
collection of debts.
§ 1542. Suit for taxes.
(a) Commencement.--The department may, within three years
after a tax is finally due and payable, commence an action in
the courts of the United States, this Commonwealth or any state
in the name of the Commonwealth to collect tax due together with
additions, interest, penalties and costs as provided at law or
in equity for the collection of ordinary debts.
(b) Procedure.--The Attorney General shall prosecute the
action and, except as provided in this subpart, the Rules of
Civil Procedure and the laws of this Commonwealth relating to
civil procedures and remedies shall be available in the
proceedings.
(c) Other remedies.--The provisions of this section are in
addition to any process, remedy or procedure for the collection
of taxes provided by this subpart or by the laws of this
Commonwealth. This section shall not be limited by nor is
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intended to limit any process, remedy or procedure.
§ 1543. Tax suit comity.
The courts of this Commonwealth shall recognize and enforce a
liability for sales and use tax lawfully imposed by another
state, if the other state extends a like comity to this
Commonwealth.
§ 1544. Service.
A person maintaining a place of business within this
Commonwealth shall appoint the Secretary of the Commonwealth as
the person's agent for the acceptance of service of process or
notice in proceedings for the enforcement of the civil
provisions of this part. The following shall apply:
(1) Service made upon the Secretary of the Commonwealth
as the agent shall have the same legal force and validity as
if the service had been personally made upon the person.
(2) If service cannot be made upon the person in the
manner provided by other laws of this Commonwealth relating
to service of process, service may be made upon the Secretary
of the Commonwealth, and a copy of the process or notice
shall also be personally served upon an agent or
representative of the person who may be found within this
Commonwealth.
(3) If no agent or representative may be found, a copy
of the process or notice shall be sent by registered mail to
the person at the last known address of the person's
principal place of business, home office or residence.
§ 1545. Collection and payment of tax on credit sales.
If a sale subject to tax under this subpart is wholly or
partly on credit, the vendor shall require the purchaser to pay
in cash at the time the sale is made, or within 30 days
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thereafter, the total amount of tax due upon the entire purchase
price. The vendor shall remit the tax to the department,
notwithstanding whether payment was made by the purchaser to the
vendor, and the next return must be filed under section 1513
(relating to time for filing returns).
§ 1546. Prepayment of tax.
If a vendor is forbidden by law to charge and collect the
purchase price in advance of or at the time of delivery, the
vendor shall prepay the tax as required by section 1522
(relating to time of payment). If the purchaser fails to pay to
the vendor the total amount of the purchase price and the tax,
and the amount is written off as uncollectible by the vendor,
the vendor shall not be liable for the tax and shall be entitled
to a credit or refund of the tax paid. The following shall
apply:
(1) If the purchase price is later collected, in whole
or in part, the amount collected shall be first applied to
the payment of the entire tax portion of the bill and shall
be remitted to the department by the vendor with the first
return filed after the collection.
(2) For tax prepaid prior to March 4, 1971, credit may
be claimed on returns filed for the periods prior to March 4,
1971.
(3) Tax prepaid after March 4, 1971, shall be subject to
refund upon petition to the department under section 1561
(relating to refunds), filed within 105 days of the close of
the fiscal year in which the accounts are written off.
§ 1547. Refund of sales tax attributed to bad debt.
(a) Conditions.--A vendor may file a petition for refund of
sales tax paid to the department that is attributed to a bad
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debt if all of the following apply:
(1) The purchaser fails to pay the total purchase price.
(2) The purchase price is written off, either in whole
or in part, as a bad debt on the books and records of the
vendor or an affiliate of the vendor.
(3) The debt has been deducted for Federal income tax
purposes under section 166 of the Internal Revenue Code of
1986.
(b) Petition.--A petition for refund under this section must
be filed with the department within the time limitations
prescribed by section 3003.1(a) of the Tax Reform Code of 1971.
(c) Private-label credit card accounts.--In the case of
private-label credit card accounts not qualifying under
subsection (a), a vendor or lender that makes an election under
subsection (d) may file a petition for refund of sales tax that
the vendor has previously reported and paid to the department if
all of the following conditions are met:
(1) No refund was previously allowed with respect to the
portion of the account written off as a bad debt.
(2) The account has been found worthless and written
off, either in whole or in part, as bad debt on the books and
records of the lender or an affiliate of the lender.
(3) The account has been deducted for Federal income tax
purposes under section 166 of the Internal Revenue Code of
1986 by the lender or an affiliate of the lender.
(d) Joint election for refund.--In order to be eligible for
a refund under subsection (c), the lender and the vendor must
execute and file with the department a joint election, signed by
both parties, designating which party is entitled to claim the
refund. The election may not be revoked unless a written notice
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is signed by the party that signed the election being revoked
and is filed with the department.
(e) Payment of refund.--The refund authorized by this
section is limited to the sales tax paid to the department that
is attributed to the bad debt, less any discount under section
1526 (relating to discount). The following apply:
(1) Partial payments by the purchaser shall be prorated
between the original purchase price and the sales tax due on
the sale.
(2) Payments made on a transaction which includes both
taxable and nontaxable components shall be allocated
proportionally between the taxable and nontaxable components.
(f) Assignment of right to petition.--A vendor or a lender
may assign the vendor's or lender's right to petition and
receive a refund of sales tax attributed to a bad debt to an
affiliate.
(g) Exceptions.--No refund shall be granted under this
section for any of the following:
(1) Interest.
(2) Finance charges.
(3) Expenses incurred in attempting to collect an
account receivable.
(h) Documentation.--Documentation requirements are as
follows:
(1) A person claiming a refund under this section shall,
on request, make available documentation supporting the
claimed refund, including:
(i) The date of the original sale and the name and
Pennsylvania sales tax license number of the retailer.
(ii) The name and address of the purchaser.
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(iii) The amount that the purchaser paid or agreed
to pay.
(iv) Taxable and nontaxable charges.
(v) The amount on which the retailer reported and
paid sales tax.
(vi) All payments or other credits applied to the
account of the purchaser.
(vii) Evidence that the uncollected amount was:
(A) designated as a bad debt in the books and
records of the vendor or lender, as appropriate; and
(B) claimed as a bad debt deduction for Federal
income tax purposes.
(viii) The county in which local sales tax was
incurred.
(ix) The unpaid portion of the sales price.
(x) A certification, under penalty of perjury, that
no person collected money on the bad debt for which the
refund is claimed.
(xi) Any other information required by the
department.
(2) A person claiming a refund under this section may
provide alternative forms of documentation to the department
if appropriate in light of the volume and character of
uncollectible accounts. The following apply:
(i) If a vendor remits sales or use tax to the
Commonwealth and to another state, the entity claiming a
refund under this section may use an apportionment method
to substantiate the amount of Pennsylvania tax included
in the bad debts to which the refund applies.
(ii) The apportionment method must use the vendor's
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Pennsylvania and non-Pennsylvania sales, the vendor's
taxable and nontaxable sales and the amount of tax the
vendor remitted to Pennsylvania.
(i) Collection of tax of prior bad debt.--
(1) If the purchase price which is attributed to a prior
bad debt refund is collected in whole or in part by the
vendor or lender or an affiliate of the vendor or lender, the
entity claiming the refund shall remit the proportional tax
to the department with the first return filed after the
collection. If the entity is not required to file periodic
returns, the entity shall remit the proportional tax to the
department with another return under section 1513 (relating
to time for filing returns).
(2) Consideration received for the assignment, sale or
other transfer of a bad debt with respect to which a refund
has been granted shall be deemed to be a collection of a
prior bad debt. This paragraph does not apply to a transfer
to an entity that is part of the same affiliated group, as
defined by section 1504 of the Internal Revenue Code of 1986.
(3) A person that collects, in whole or in part, the
purchase price attributed to a prior bad debt refund is
required to maintain adequate documentation to allow the
department to determine whether the purchase price attributed
to a prior bad debt refund has been collected. Information
under this paragraph includes the pertinent facts required by
subsection (h).
(4) If the department determines that a prior bad debt
has been collected, in whole or in part, and that the
proportional tax has not been properly reported and paid to
the department, the person that claimed the refund on the
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transaction shall report and pay the proportional tax to the
department plus applicable interest and penalty under this
chapter.
(j) Interest.--Notwithstanding section 806.1 of the Fiscal
Code, no interest shall be paid by the Commonwealth on refunds
of sales tax attributed to bad debt under this section.
(k) Procedure.--
(1) No refund or credit of sales tax shall be made for
any uncollected purchase price or bad debt except as
authorized by this section.
(2) No deduction or credit for bad debt may be taken on
a return filed with the department.
(3) This section provides the exclusive procedure for
claiming a refund or credit of sales tax attributed to
uncollected purchase price or bad debt.
(l) Bad debts.--A private-label credit card does not
authorize a refund with respect to a bad debt attributable to a
sale by a person not related to the private-label credit card.
(m) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection:
"Affiliate." A person that is:
(1) an affiliated entity, under section 1504 of the
Internal Revenue Code of 1986, of a vendor; or
(2) a person described under paragraph (1) or (2) of the
definition of "lender" that would be an affiliated entity,
under section 1504 of the Internal Revenue Code of 1986, of a
vendor but for the fact the person is not a corporation, an
assignee or another transferee of a person described under
paragraph (1) or (2) of the definition of "lender."
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"Lender." Any of the following:
(1) A person that owns or has owned a private-label
credit card account purchased directly from a vendor that
reported the tax under this subpart.
(2) A person that owns or has owned a private-label
credit card account under a contract directly with a vendor
that reported the tax under this subpart.
(3) A person that is:
(i) an affiliate of a person described under
paragraph (1) or (2); or
(ii) an assignee or other transferee of a person
described under paragraph (1) or (2).
"Private-label credit card." As follows:
(1) A charge card, credit card or other instrument
serving a similar purpose which:
(i) carries, refers to or is branded with the name
or logo of a vendor; and
(ii) can be used for purchases from the vendor.
(2) The term does not include a card or instrument which
may also be used to make purchases from a person other than
the vendor whose name or logo appears on the card or
instrument or that vendor's affiliates.
§ 1548. Registration of transient vendors.
(a) Registration required.--Prior to conducting business or
commencing operations within this Commonwealth, a transient
vendor shall register with the department. The application for
registration must be in the form and contain information the
department prescribes and shall set forth truthfully and
accurately the information required by the department. The
registration must be renewed and updated annually.
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(b) Certificate.--Upon registration and the posting of the
bond required by section 1549 (relating to bond), the department
shall issue to a transient vendor a certificate valid for one
year. Upon renewal of registration, the department shall issue a
new certificate, valid for one year, if the department is
satisfied that the transient vendor has complied with this
chapter.
(c) Possession of certificate.--The transient vendor must
possess the certificate at all times when conducting business
within this Commonwealth and shall exhibit the certificate upon
demand by authorized employees of the department or a law
enforcement officer.
(d) Information on certificate.--The certificate issued by
the department shall state that the transient vendor named on
the certificate has registered with the department and shall
provide notice to the transient vendor of all of the following:
(1) The requirements of section 1550(a) (relating to
notification to department and inspection of records).
(2) Failure to notify or giving false information to the
department may result in suspension or revocation of the
transient vendor's certificate.
(3) Conducting business within this Commonwealth after a
certificate has been suspended or revoked may result in
criminal conviction and the imposition of fines or other
penalties.
§ 1549. Bond.
(a) Posting.--Upon registration with the department, a
transient vendor must post a bond with the department in the
amount of $500 as surety for compliance with the provisions of
this subpart.
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(b) Reduction or elimination.--After a period of
demonstrated compliance with the provisions of this subpart, or
if the transient vendor provides the license number of a
promoter that has notified the department of a show under
section 1554(a) (relating to promoters), the department may
reduce the amount of bond required of a transient vendor or may
eliminate the bond entirely.
(c) Voluntary suspension of certificate.--A transient vendor
may file a request for voluntary suspension of certificate with
the department. If the provisions of this subpart have been
complied with and the department has possession of the transient
vendor's certificate, the department shall return the bond
posted to the transient vendor.
§ 1550. Notification to department and inspection of records.
(a) Notification.--Prior to entering this Commonwealth to
conduct business, a transient vendor shall notify the department
in writing of each location where the transient vendor intends
to conduct business and each date on which the transient vendor
intends to conduct business.
(b) Inspection of sales records.--When conducting business
in this Commonwealth, a transient vendor shall permit authorized
employees of the department to inspect the transient vendor's
sales records, including sales receipts and inventory or price
lists, and tangible personal property offered for sale at
retail.
(c) Suspension or revocation of certificate.--The department
may suspend or revoke a certificate issued to a transient vendor
if the transient vendor:
(1) fails to notify the department under subsection (a);
(2) provides the department with false information
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regarding the conduct of business within this Commonwealth;
(3) fails to collect sales tax on all tangible personal
property or services sold which are subject to the sales tax;
or
(4) fails to file with the department a tax return as
required by section 1513 (relating to time for filing
returns).
(d) Regulations.--The department shall promulgate
regulations necessary to implement this section.
§ 1551. Seizure of property.
(a) Seizure for noncompliance.--If a transient vendor
conducting business in this Commonwealth fails to exhibit a
valid certificate upon demand by an authorized employee of the
department, the authorized employee may seize, without warrant,
the tangible personal property and the means of transportation
used to transport or carry the property. Except as set forth in
subsection (b), property seized shall be deemed contraband and
shall be subject to immediate forfeiture proceedings instituted
by the department under procedures promulgated by regulation.
(b) Release of seized property.--Property seized under
subsection (a) shall be released upon any of the following:
(1) Presentation of a valid certificate to an authorized
employee of the department.
(2) Registration by the transient vendor with the
department and the posting of a bond in the amount of $500,
either immediately or within 15 days after the property is
seized.
§ 1552. Fines.
A transient vendor conducting business within this
Commonwealth when the transient vendor's certificate is
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suspended or revoked under sections 1549(b) (relating to bond)
and 1550(c) (relating to notification to department and
inspection of records), commits a misdemeanor of the third
degree for each offense.
§ 1553. Transient vendors subject to subpart.
A transient vendor shall be subject to the provisions of this
subpart in the same manner as a vendor who maintains a place of
business within this Commonwealth.
§ 1554. Promoters.
(a) Application for license.--A promoter of a show in this
Commonwealth may file with the department an application for a
promoter's license stating the location and dates of each show.
The application must be filed at least 30 days prior to the
opening of the first show and be in the form as the department
may prescribe.
(b) Issuance.--Except as otherwise provided, within 15 days
after receipt of an application for a license, the department
shall issue to the promoter, without charge, a license to
operate a show. If application for a license under this section
has been timely filed and if the license has not been received
by the promoter prior to the opening of the show, the
authorization contained in this section with respect to the
obtaining of a promoter's license shall be deemed to have been
complied with, unless the promoter receives notice from the
department denying the application for a promoter's license.
(c) Compliance.--A promoter who is a vendor under section
1102 (relating to definitions) shall comply with all the
provisions of this subpart applicable to vendors and with the
provisions of this section applicable to promoters.
(d) License required.--A licensed promoter may not permit a
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person to display for sale or sell tangible personal property or
services subject to tax under Subchapter A of Chapter 13
(relating to imposition of tax) at a show unless the person is
licensed under Subchapter D of Chapter 13 (relating to licenses)
and provides to the promoter the information required under
section 1593 (relating to reports and records of promoters).
(e) Penalties.--
(1) A licensed promoter is subject to denial of a
license or revocation of an existing license issued under
this section for any of the following:
(i) Permitting a person to display for sale or to
sell tangible personal property or service without first
having been licensed under Subchapter D of Chapter 13.
(ii) Failing to maintain records of a show under
section 1593.
(iii) Knowingly maintaining false records.
(iv) Failing to comply with this section or a
regulation promulgated by the department pertaining to
shows.
(2) In addition to the penalties under paragraph (1),
the department may deny a promoter a license certificate to
operate a show for a period of not more than six months from
the date of the denial. The penalty shall be in addition to
any other penalty imposed by this subpart.
(3) Within 20 days of notice of denial or revocation of
a license by the department, the promoter may petition the
department for a hearing under 2 Pa.C.S. (relating to
administrative law and procedure).
SUBCHAPTER E
REFUNDS AND CREDITS
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Sec.
1561. Refunds.
1562. Refund petition.
1563. Extended time for filing special petition for refund.
§ 1561. Refunds.
The following apply:
(1) The department shall, under Article XXVII of the Tax
Reform Code of 1971, refund all taxes, interest and penalties
paid to the Commonwealth under this subchapter to which the
Commonwealth is not rightfully entitled.
(2) Refunds shall be made to the person or the person's
heir, successor, assign or other personal representative who
paid the tax.
(3) A refund shall not be made under this section with
respect to a payment made by reason of an assessment with
respect to which a taxpayer has filed a petition for
reassessment under section 2702 of the Tax Reform Code of
1971 to the extent that the petition has been determined
adversely to the taxpayer by a decision which is no longer
subject to further review or appeal.
(4) Nothing in this section shall prohibit a taxpayer
who has filed a timely petition for reassessment from
amending the petition to a petition for refund if the
petitioner has paid the tax assessed.
§ 1562. Refund petition.
(a) General rule.--Except as provided for in section 1563
(relating to extended time for filing special petition for
refund) and subsection (b), the refund or credit of tax,
interest or penalty provided for in section 1561 (relating to
refunds) shall be made only if the person who has paid the tax
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files a petition for refund with the department under Article
XXVII of the Tax Reform Code of 1971 within the time limits of
section 3003.1 of the Tax Reform Code of 1971.
(b) Payment.--A refund or credit of tax, interest or penalty
paid as a result of an assessment made by the department under
section 1532 (relating to mode and time of assessment) shall be
made only if the person who has paid the tax files a petition
for a refund with the department under Article XXVII of the Tax
Reform Code of 1971 within the time limits of section 3003.1 of
the Tax Reform Code of 1971. The filing of a petition for refund
under this subsection shall not affect the abatement of
interest, additions or penalties to which the person may be
entitled by reason of payment of the assessment.
§ 1563. Extended time for filing special petition for refund.
(a) Filing.--A party to a transaction who has paid tax by
reason of a transaction with respect to which the department is
assessing tax against another person may, within six months
after the filing by the department of the assessment against the
other person, file a special petition for refund,
notwithstanding the person's failure to timely file a petition
under section 3003.1 of the Tax Reform Code of 1971.
(b) Applicability.--Article XXVII of the Tax Reform Code of
1971 shall apply to a special petition for refund, except that
the department may not act on the petition until there is a
final determination as to the propriety of the assessment filed
against the other party to the transaction.
(c) Overpayments.--If a petition is filed under this section
to take advantage of the extended period of limitations,
overpayments by the petitioner shall be refunded to the extent
of the actual tax, without consideration of interest and
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penalties, paid by the other party to the transaction.
(d) Construction.--The purpose of this section is to avoid
duplicate payment of tax if a determination is made by the
department that one party to a transaction is subject to tax,
and another party to the transaction has previously paid tax
with respect to the transaction. This section shall be construed
as extending a right beyond that provided for by section 1562
(relating to refund petition) and not to limit section 1562.
SUBCHAPTER F
LIMITATIONS
Sec.
1571. Limitation on assessment and collection.
1572. Failure to file return.
1573. False or fraudulent return.
1574. Extension of limitation period.
§ 1571. Limitation on assessment and collection.
The amount of the tax imposed by this subpart shall be
assessed within three years after the date when the return under
section 1513(a) or (c) (relating to time for filing returns) is
filed or the end of the year in which the tax liability arises,
whichever occurs later. An assessment may be made at any time
during the period, notwithstanding that the department may have
made one or more previous assessments against the taxpayer for
the year in question, or for any part of the year. Credit may
not be given for a penalty previously assessed or paid.
§ 1572. Failure to file return.
If no return is filed, the amount of the tax due may be
assessed and collected at any time as to taxable transactions
not reported.
§ 1573. False or fraudulent return.
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If a taxpayer willfully files a false or fraudulent return
with intent to evade the tax imposed by this subpart, the amount
of tax due may be assessed and collected at any time.
§ 1574. Extension of limitation period.
Notwithstanding any other provision of this subpart, if,
before the expiration of the period in section 1571 (relating to
limitation on assessment and collection) for the assessment of a
tax, a taxpayer has consented in writing that the period be
extended, the amount of tax due may be assessed at any time
within the extended period. The extended period may be extended
further by subsequent consents in writing made before the
expiration of the extended period.
SUBCHAPTER G
INTEREST, ADDITIONS, PENALTIES AND CRIMES
Sec.
1581. Interest.
1582. Additions to tax.
1583. Penalties.
1584. Crimes.
1585. Abatement of additions or penalties.
§ 1581. Interest.
If an amount of tax imposed by this subpart is not paid to
the department on or before the last date prescribed for
payment, interest on the amount at the rate of 0.75% per month
for each month, or fraction of a month, shall be paid for the
period from the last date to the date paid. The last date
prescribed for payment shall be determined under section 1522(a)
or (c) (relating to time of payment) without regard to any
extension of time for payment. For an amount assessed as a
deficiency or as an estimated assessment, the date prescribed
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for payment shall be 30 days after notice of the assessment.
§ 1582. Additions to tax.
(a) Failure to file return.--For a failure to file a return
required by section 1511 (relating to persons required to make
returns) on the date prescribed for filing the return, including
any extensions, and for a return filed which understates the
true amount due by more than 50%, 5% of the amount of the tax
shall be added to the amount of tax due if the failure to file a
proper return is for not more than one month and an additional
5% for each additional month, or fraction of a month, during
which the failure continues, not to exceed 25% in the aggregate.
At least $2 shall be added to each failure to file a proper
return under this subsection.
(b) Addition for understatement.--There shall be added to
every assessment under section 1532(b) (relating to mode and
time of assessment) 5% of the amount of the understatement and
no addition to the tax shall be paid under section 1532(a).
(c) Interest.--If the department assesses a tax under
section 1532(a), (b) or (c), there shall be added to the amount
of the deficiency interest at the rate of 0.75% per month for
each month, or fraction of a month, from the date prescribed by
section 1522(a) or (c) (relating to time of payment) for the
payment of the tax to the date of notice of the assessment.
§ 1583. Penalties.
(a) Penalty assessed as tax.--The penalties, additions,
interest and liabilities provided by this subpart shall be paid
upon notice and demand by the department and shall be assessed
and collected in the same manner as taxes. Except as otherwise
provided, any reference in this chapter to tax imposed by this
subpart shall also be deemed to refer to the penalties,
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additions, interest and liabilities provided by this chapter.
(b) Attempt to evade or defeat tax.--
(1) A person who willfully attempts to evade or defeat
the tax or the payment of the tax imposed by this subpart or
to assist another person to evade or defeat the tax or the
payment of the tax imposed by this subpart, or to receive a
refund improperly, shall, in addition to other penalties
provided by law, be liable for a penalty equal to one-half of
the total amount of the tax evaded.
(2) In a direct proceeding arising out of a petition for
reassessment or refund as provided in this chapter in which
an issue of fact is raised with respect to whether a return
is fraudulent or with respect to the propriety of the
imposition by the department of the penalty prescribed in
this subsection, the burden of proof shall be on the
department.
§ 1584. Crimes.
(a) Fraudulent return.--A person who, with intent to defraud
the Commonwealth, willfully makes or causes to be made a return
required by this subpart which is false commits a misdemeanor
and shall, upon conviction, be sentenced to pay a fine not
exceeding $2,000 or to imprisonment for not more than three
years, or both.
(b) Other crimes.--
(1) A person commits a misdemeanor and shall, upon
conviction, be sentenced to pay a fine not exceeding $1,000
and costs of prosecution or to imprisonment for not more than
one year, or both, for any of the following:
(i) Except as otherwise provided under subsection
(a), advertising, holding out or stating to the public or
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to a purchaser or user, directly or indirectly, that the
tax or any part of the tax imposed by this subpart will
not be added to the purchase price of the tangible
personal property or services described under paragraph
(1)(ii), (iii), (iv), (vi), (vii), (viii), (ix), (x),
(xi) and (xii) of the definition of "sale at retail" in
section 1102 (relating to definitions) or that the tax or
any part of the tax will be refunded, other than when the
person refunds the purchase price because of the property
being returned to the vendor.
(ii) For a person selling or leasing tangible
personal property or services subject to tax under this
subpart, except as otherwise provided, willfully failing
to collect the tax from the purchaser and timely
remitting the tax to the department or willfully failing
or neglecting to timely file a return or report required
by this subpart.
(iii) Refusing to timely pay a tax, penalty or
interest imposed or provided for under this subpart.
(iv) Willfully failing to preserve books, papers and
records as directed by the department or refusing to
permit the department or the department's authorized
agents to examine books, records or papers.
(v) Knowingly making an incomplete, false or
fraudulent return or report.
(vi) Preventing the full disclosure of the amount or
character of taxable sales purchases or use made by the
person or any other person.
(vii) Providing a person with a false statement as
to the payment of tax with respect to particular tangible
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personal property or services.
(viii) Creating or issuing a false or fraudulent
exemption certificate.
(2) Notwithstanding paragraph (1), a person may
advertise or hold out or state to the public or to a
purchaser or user, directly or indirectly, that the tax or
any part thereof imposed by this subpart will be absorbed and
paid by the person subject to the following conditions:
(i) The person shall expressly state on a receipt,
invoice, sales slip or other similar document evidencing
the sale given to the purchaser that the person will pay
the tax imposed by this subpart on behalf of the
purchaser and shall not indicate or imply that the
transaction is exempt or excluded from tax imposed by
this subpart.
(ii) A receipt, invoice, sales slip or other similar
document evidencing a sale given to the purchaser shall
separately state the amount of tax.
(iii) The person, when recording the sale in the
person's books and records, shall separately state the
purchase price and the tax.
(iv) The amount of tax shall be calculated by
multiplying the total purchase price by the rate of tax
imposed by Subchapter A (relating to imposition of tax).
(3) If a person advertises or holds out or states to the
public or to a purchaser or user, directly or indirectly,
that the person will absorb and pay the tax, subject to the
conditions of this subsection, the person shall be solely
responsible and liable for a tax imposed by this subpart,
notwithstanding any provisions of this subpart to the
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contrary, and shall not be entitled to a refund of tax.
(c) Sales suppression devices and phantomware.--
(1) Subject to paragraph (2), notwithstanding any other
provision of this subpart, a person who purchases, installs
or uses in this Commonwealth an automated sales suppression
device or zapper or phantomware with the intent to defeat or
evade the determination of an amount due under this part
commits a misdemeanor. The following apply:
(i) A person who, for commercial gain, sells,
purchases, installs, transfers or possesses in this
Commonwealth an automated sales suppression device or
zapper or phantomware with the knowledge that the sole
purpose of the device is to defeat or evade the
determination of an amount due under this part commits a
misdemeanor and shall, upon conviction, be sentenced to
pay a fine specified under subparagraph (ii) or to
imprisonment for not more than one year, or both. A
person who uses an automated sales suppression device or
zapper or phantomware shall be liable for all taxes,
interest and penalties due as a result of the use of the
device.
(ii) If a person is guilty of an offense under this
paragraph and the person sold, installed, transferred or
possessed not more than three automated sales suppression
devices or zappers or phantomware, the person commits an
offense punishable by a fine of not more than $5,000.
(iii) If a person commits an offense under this
paragraph and the person sold, installed, transferred or
possessed more than three automated sales suppression
devices or zappers or phantomware, the person commits an
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offense punishable by a fine of not more than $10,000.
(2) This subsection shall not apply to a corporation
that possesses an automated sales suppression device or
zapper or phantomware for the sole purpose of developing
hardware or software to combat the evasion of taxes by use of
automated sales suppression devices or zappers or
phantomware.
(3) As used in this subsection, the following words and
phrases shall have the meanings given to them in this
paragraph unless the context clearly indicates otherwise:
"Automated sales suppression device" or "zapper." A
software program carried on a memory stick or removable
compact disc, accessed through an Internet link or through
any other means, that falsifies the electronic records of
electronic cash registers and other point-of-sale systems,
including transaction data and transaction reports.
"Electronic cash register." A device that keeps a
register or supporting document through the means of an
electronic device or computer system designed to record
transaction data for the purpose of computing, compiling or
processing retail sales transaction data in whatever manner.
"Phantomware." A hidden programming option, which is
either preinstalled or installed at a later time, embedded in
the operating system of an electronic cash register or
hardwired into the electronic cash register that can be used
to create a virtual second till or may eliminate or
manipulate a transaction record that may or may not be
preserved in digital formats to represent the true or
manipulated record of transactions in the electronic cash
register.
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"Transaction data." Includes information regarding items
purchased by a customer, the price for each item, a
taxability determination for each item, a segregated tax
amount for each of the taxed items, the amount of cash or
credit tendered, the net amount returned to the customer in
change, the date and time of the purchase, the name, address
and identification number of the vendor and the receipt or
invoice number of the transaction.
(d) Prosecution.--This section shall not preclude
prosecution under any other law.
(e) Penalties.--The penalties imposed by this section shall
be in addition to any other penalties imposed by this
subchapter.
§ 1585. Abatement of additions or penalties.
Upon the filing of a petition for reassessment or a petition
for refund as provided under this subpart by a taxpayer,
additions or penalties imposed upon the taxpayer by this part
may be waived or abated, in whole or in part, if the petitioner
has established that the petitioner has acted in good faith,
without negligence and with no intent to defraud.
SUBCHAPTER H
ENFORCEMENT AND EXAMINATIONS
Sec.
1591. Rules and regulations.
1592. Keeping of records.
1593. Reports and records of promoters.
1594. Examinations.
1595. Records and examinations of delivery agents.
1596. Unauthorized disclosure.
1597. Cooperation with other governments.
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1598. Interstate compacts.
1599. Bonds.
1599.1. Remote sales reports.
1599.2. Class actions.
§ 1591. Rules and regulations.
(a) General rule.--The department is charged with the
enforcement of this chapter and may prescribe, adopt, promulgate
and enforce rules and regulations consistent with this chapter
relating to any matter or thing pertaining to the administration
and enforcement of this chapter and the collection of taxes,
penalties and interest imposed by this chapter. The department
may prescribe the extent, if any, to which the rules and
regulations shall be applied without retroactive effect.
(b) Sales between affiliated interests.--
(1) In determining the purchase price of taxable sales
where, because of affiliation of interests between the vendor
and the purchaser or irrespective of an affiliation, or for
any other reason, the purchase price of the sale is not
indicative of the true value or fair price of the article,
the department shall determine the amount of constructive
purchase price upon which the tax shall be computed and
levied.
(2) The rules shall provide for a constructive amount of
a purchase price for each sale, which shall equal a price for
the article which would naturally and fairly be charged in an
arm's-length transaction in which the element of common
interests between vendor and purchaser, or, if no common
interest exists, any other element causing a distortion of
the price or value is absent.
(3) For the purpose of this chapter, if a taxable sale
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occurs between a parent corporation and a subsidiary
affiliate or controlled corporation of the parent, there
shall be a rebuttable presumption that because of the common
interest the transaction was not at arm's length.
§ 1592. Keeping of records.
(a) General rule.--Every person liable for a tax imposed by
this chapter or for the collection of a tax shall keep records,
render statements, make returns and comply with rules and
regulations as the department may prescribe. The department as
it deems necessary may require a person, by notice served upon
the person or by regulations, to make returns, render statements
or keep records as the department deems sufficient to show
whether or not the person is liable to pay or collect tax under
this chapter.
(b) Persons collecting tax from others.--A person liable to
collect tax from another person under this chapter shall file
reports, keep records, make payments and be subject to interest
and penalties provided for under this chapter in the same manner
as if the person was directly subject to the tax.
(c) Records of nonresidents.--
(1) A nonresident who does business in this Commonwealth
as a retail dealer shall keep adequate records of each
business and of the tax due, which shall be retained within
this Commonwealth unless retention outside this Commonwealth
is authorized by the department.
(2) Taxes collected from purchasers may not be sent
outside this Commonwealth without the written consent of, and
in accordance with conditions prescribed by, the department.
(3) The department may require a taxpayer who desires to
retain records or tax collections outside this Commonwealth
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to assume reasonable out-of-State audit expenses.
(d) Keeping of separate records.--A person doing business as
a retail dealer who at the same time is engaged in another
business which does not involve the making of sales taxable
under this chapter shall keep separate books and records of each
business to show the sales taxable under this chapter separately
from the sales not taxable under this chapter. If a person fails
to keep separate books and records, the person shall be liable
for tax at the rate designated under Subchapter A of Chapter 13
(relating to imposition of tax) on the entire purchase price of
sales from each business.
(e) Other methods.--If a vendor gives no sales memoranda or
uses registers showing only total sales, the vendor shall adopt
some method of segregating tax from sales receipts and keep
records showing the segregation, in accordance with proper
accounting and business practices.
(f) Collection and recording procedure.--
(1) A vendor may apply to the department for permission
to use a collection and recording procedure which will show
the information required by law with reasonable accuracy and
simplicity.
(2) The application shall contain a detailed description
of the procedure to be adopted.
(3) Permission to use the proposed procedure is not to
be construed as relieving the vendor from remitting the full
amount of tax collected.
(4) The department may revoke the permission upon 30
days' notice to the vendor.
(5) Refusal of the department to grant permission in
advance to use the procedure shall not be construed to
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invalidate a procedure which, upon examination, shows the
information required by law.
§ 1593. Reports and records of promoters.
Every licensed promoter shall keep a record of the date and
place of each show and the name, address, sales, use and hotel
occupancy license number of every person whom the promoter
permits to display for sale or sell tangible personal property
or services subject to tax under Subchapter A of Chapter 13
(relating to imposition of tax) at the show. The records shall
be open for inspection and examination at any reasonable time by
the department or a duly authorized representative, and the
records shall, unless the department consents in writing to an
earlier destruction, be preserved for three years after the date
the report was filed or the date it was due, whichever occurs
later, except that the department may by regulation require that
the records be kept for a longer period of time.
§ 1594. Examinations.
The following apply:
(1) The department or an authorized agent may examine
the books, papers and records of a taxpayer in order to
verify the accuracy and completeness of a return made or, if
no return was made, to ascertain and assess the tax imposed
by this chapter.
(2) The department may require the preservation of each
book, paper and record for a period deemed proper by the
department but not to exceed three years from the end of the
calendar year to which the records relate.
(3) Every taxpayer shall give to the department, or its
agent, the means, facilities and opportunity for examination
and investigation. The department may examine any person,
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under oath, concerning taxable sales or use by a taxpayer or
concerning any other matter relating to the enforcement or
administration of this chapter and for this purpose may
compel the production of books, papers and records and the
attendance of all persons, whether as parties or witnesses,
whom the department believes to have knowledge of the
matters.
(4) The procedure for hearings or examinations shall be
the same as that provided by the Fiscal Code relating to
inquisitorial powers of fiscal officers.
§ 1595. Records and examinations of delivery agents.
Every agent, for the purpose of delivery of goods shipped
into this Commonwealth by a nonresident, including common
carriers, shall maintain adequate records of the deliveries
under rules and regulations adopted by the department and shall
make the records available to the department upon request.
§ 1596. Unauthorized disclosure.
(a) Confidentiality and exceptions.--Information gained by
the department as a result of a return, examination,
investigation, hearing or verification required or authorized by
this chapter shall be confidential, except:
(1) for official purposes; or
(2) in accordance with proper judicial order or as
otherwise provided by law.
(b) Penalty.--A person unlawfully divulging information
commits a misdemeanor and shall, upon conviction, be sentenced
to pay a fine of not more than $1,000 along with the costs of
prosecution, or to imprisonment for not more than one year, or
both.
§ 1597. Cooperation with other governments.
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(a) General rule.--Subject to subsection (b),
notwithstanding section 1596 (relating to unauthorized
disclosure), the department may:
(1) permit the Commissioner of Internal Revenue of the
United States, the proper officer of any state or the
authorized representative of either officer to inspect the
tax returns of a taxpayer; or
(2) furnish to the officer or to an authorized
representative under paragraph (1) an abstract of the return
of a taxpayer or information concerning an item contained in
a return or disclosed by the report of an examination or
investigation of the return of a taxpayer.
(b) Condition.--Permission under subsection (a) shall be
granted only if Federal law or the statutes of another state
grant substantially similar privileges to the proper officer of
the Commonwealth charged with the administration of this
chapter.
§ 1598. Interstate compacts.
(a) General authority.--The Governor, or an authorized
representative, may confer with the Governor or authorized
representatives of other states regarding reciprocal use tax
collection between the Commonwealth and other states.
(b) Use of compacts and agreements.--The Governor, or an
authorized representative, may join with the authorities of
other states to conduct joint investigations, exchange
information, hold joint hearings and enter into compacts or
interstate agreements with other states to accomplish uniform
reciprocal use tax collections between those states who are
parties to a compact or interstate agreement and the
Commonwealth.
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§ 1599. Bonds.
(a) Taxpayer to file bond.--
(1) If the department deems it necessary to protect the
revenues to be obtained under this chapter, the department
may require a nonresident individual or a foreign
corporation, association, fiduciary, partnership or other
entity not authorized to do business in this Commonwealth or
not having an established place of business in this
Commonwealth and subject to the tax imposed by Subchapter A
of Chapter 13 (relating to imposition of tax) to file a bond
issued by a surety company authorized to do business in this
Commonwealth and approved by the Insurance Commissioner as to
solvency and responsibility, in an amount fixed by the
department, to secure the payment of tax or penalties due or
which may become due, from the individual or entity.
(2) To protect the revenues to be obtained under this
subchapter, the department shall require a nonresident
individual or foreign corporation, association, fiduciary,
partnership or other entity that is a building contractor or
supplier delivering building materials for work in this
Commonwealth and is not authorized to do business within this
Commonwealth or does not have an established place of
business in this Commonwealth and is subject to the tax
imposed by Subchapter A of Chapter 13, to file a bond issued
by a surety company authorized to do business in this
Commonwealth and approved by the Insurance Commissioner as to
solvency and responsibility, in an amount fixed by the
department to secure the payments of tax or penalties due or
which may become due, from the individual or entity.
(3) In addition to a bond under paragraph (1) or (2),
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the department may require a bond of a person petitioning the
department for reassessment in the case of an assessment of
more than $500 or where the ultimate collection is in
jeopardy.
(4) The department may, for a period of three years,
require a bond of a person who has, on three or more
occasions within a 12-month period, either filed a return or
made payment to the department more than 30 days late. The
following shall apply:
(i) If the department determines that a taxpayer is
to file a bond, the department shall give notice to the
taxpayer and specify the amount of the bond required.
(ii) The taxpayer shall file the bond within five
days after notice is given by the department unless,
within those five days, the taxpayer requests in writing
a hearing before the secretary or a representative.
(iii) The necessity, propriety and amount of the
bond shall be determined by the secretary or a
representative of the department at the hearing.
(iv) The determination shall be final and shall be
complied with within 15 days after notice is mailed to
the taxpayer.
(b) Securities in lieu of bond.--
(1) In lieu of the bond required by this section,
securities approved by the department or cash in an amount as
the department may prescribe may be deposited.
(2) Securities or cash shall be kept in the custody of
the department, which may, at any time, without notice to the
depositor, apply the securities or cash to tax, interest or
penalties due, and for that purpose the securities may be
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sold by the department at public or private sale upon five
days' written notice to the depositor.
(c) Failure to file bond.--The department may file a lien
under section 1541 (relating to lien for taxes) against a
taxpayer who fails to file a bond when required to do so under
this section. All funds received upon execution of the judgment
on the lien shall be refunded to the taxpayer with 3% interest
if a final determination is made that the taxpayer does not owe
any payment to the department.
§ 1599.1. Remote sales reports.
(a) Report.--
(1) Within 90 days of the publication of the notice
under subsection (b), the Independent Fiscal Office, in
conjunction with the department, shall submit a detailed
report outlining the plans concerning the implementation of
the legislation referenced in subsection (b) or other
substantially similar Federal legislation which would grant
the Commonwealth the authority to impose and collect the tax
under this chapter due on sales from remote sellers.
(2) The report under paragraph (1) shall be submitted to
the following:
(i) The chairperson and minority chairperson of the
Appropriations Committee of the Senate.
(ii) The chairperson and minority chairperson of the
Finance Committee of the Senate.
(iii) The chairperson and minority chairperson of
the Appropriations Committee of the House of
Representatives.
(iv) The chairperson and minority chairperson of the
Finance Committee of the House of Representatives.
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(3) The report under paragraph (1) shall include all of
the following:
(i) The amount of State money necessary to implement
the legislation described under subsection (b) or other
substantially similar legislation. The amount shall be
itemized, and all costs, including personnel, office
expenses and other related costs, shall be included.
(ii) The amount of State tax revenue expected to
result from the implementation of the legislation
described under subsection (b) or other substantially
similar legislation for the fiscal year and for the five
subsequent fiscal years.
(iii) The source of money that will be utilized to
pay for the legislation described under subsection (b) or
other substantially similar legislation implementation
program.
(iv) The legal and practical issues concerning the
propriety of collecting and enforcing the tax imposed
under this chapter from remote sellers.
(v) The number of other states which have a similar
law in effect and the success or deficiency of the law.
(vi) Proposed draft legislation concerning the
implementation of the legislation described under
subsection (b) or other substantially similar
legislation.
(vii) A detailed timetable on when separate tasks
must be completed for full implementation on an estimated
start date.
(b) Notice.--The secretary shall transmit notice to the
Legislative Reference Bureau for publication in the next
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available issue of the Pennsylvania Bulletin that Federal
legislation relating to remote sellers has been enacted.
(c) Definition.--As used in this section, the term "remote
seller" shall have the same meaning as defined in section 1351
(relating to definitions).
§ 1599.2. Class actions.
A class action may not be brought against a marketplace
facilitator on behalf of purchasers arising from or in any way
related to an overpayment of sales or use tax collected by the
marketplace facilitator, regardless of whether the action is
characterized as a tax refund claim. Nothing in this section
shall affect a purchaser's right to seek a refund from the
department under other provisions of this subpart.
SUBCHAPTER I
MISCELLANEOUS PROVISIONS
Sec.
1599.11. Appropriation for special purposes.
1599.12. Transfers to Public Transportation Assistance Fund.
§ 1599.11. Appropriation for special purposes.
The proceeds of the tax imposed under this part necessary for
the payment of refunds, enforcement or administration are
appropriated for those purposes.
§ 1599.12. Transfers to Public Transportation Assistance Fund.
(a) Transfer.--Revenues received on or after July 1, 1992,
from the imposition of the tax on periodicals shall be
transferred to the Public Transportation Assistance Fund
according to the formula described under subsection (b).
(b) Formula.--Within 30 days of the close of any calendar
month, 0.44% of the taxes received in the previous month under
this subchapter, less amounts collected in the previous calendar
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month under former 74 Pa.C.S. § 1314(d) (relating to Public
Assistance Transportation Fund), shall be transferred to the
Public Transportation Assistance Fund.
(c) Transfer to Public Assistance Transportation Fund.--In
fiscal year 1991-1992, the secretary shall deposit $10,000,000
into the Public Assistance Transportation Fund from the
combination of money received under former 74 Pa.C.S. § 1314(d)
and transfers of periodical taxes received under this section.
(d) Further transfer.--Within 30 days of the close of any
calendar month, 0.09% of the taxes received in the previous
month under this chapter shall be transferred to the Public
Transportation Assistance Fund.
(e) Other transfer.--Within 30 days of the close of any
calendar month, 0.417% of the taxes received in the previous
month under this chapter shall be transferred to the Public
Transportation Assistance Fund.
SUBPART B
PERSONAL INCOME TAX
Chapter
21. Preliminary Provisions
22. Taxation Generally
23. Credits Against Tax
24. Contributions of Refunds by Checkoff
25. Withholding of Tax
26. Estimated Tax
27. Returns and Payment of Tax
28. Procedure and Administration
29. Miscellaneous Provisions
CHAPTER 21
PRELIMINARY PROVISIONS
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Sec.
2101. Scope of subpart.
2102. Definitions.
§ 2101. Scope of subpart.
This subpart relates to personal income tax.
§ 2102. Definitions.
The following words and phrases when used in this subpart
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Accepted accounting principles and practices." Unless
otherwise provided for in this subpart, the accounting
principles, systems or practices, including the installment
sales method of reporting, which are acceptable by standards of
the accounting profession and which are consistent with the
regulations of the department providing the principles and
practices.
"Association." As follows:
(1) A form of unincorporated enterprise which:
(i) is subject to the tax imposed under Article IV
of the Tax Reform Code of 1971; or
(ii) is required to make a return under section 6042
of the Internal Revenue Code of 1986.
(2) The term shall not include a partnership or
investment company.
"Business." An enterprise, activity, profession, vocation,
trade, joint venture, commerce or other undertaking of any
nature when engaged in as commercial enterprise and conducted
for profit or ordinarily conducted for profit, whether by an
individual, partnership, Pennsylvania S corporation, association
or other unincorporated entity.
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"Charitable trust." A trust operated exclusively for
religious, charitable, scientific, literary or educational
purposes.
"Claimant." A person who:
(1) is subject to the tax imposed under this subpart;
(2) is not a dependent of another taxpayer for purposes
of section 151 of the Internal Revenue Code of 1986; and
(3) is entitled to claim against the tax the poverty tax
provisions as provided under this subpart.
"Compensation." As follows:
(1) The term means and shall include salaries, wages,
commissions, bonuses and incentive payments, whether based on
profits or otherwise, fees, tips and similar remuneration
received for services rendered, whether directly or through
an agent, and whether in cash or in property.
(2) The term shall include:
(i) Any part of a distribution under a plan
described in section 409A(d)(1) of the Internal Revenue
Code of 1986, as amended, attributable to an elective
deferral of income or the income on an elective deferral
of income, whether paid or payable during employment or
to a retired individual upon or after retirement from
service.
(ii) Distributions or other payments commonly
recognized as old age or retirement benefits paid to
persons retired from service after reaching a specific
age or after a stated period of employment to the extent
that the distributions or payments, including investment
earnings, exceed previously taxed contributions. The term
with respect to these benefits shall not mean or include
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the following:
(A) Benefits paid under 42 U.S.C. Ch. 7
(relating to Social Security).
(B) A pension that is provided in lieu of old
age and survivor benefit payments under t 42 U.S.C.
Ch. 7 to a person whose employment was not covered
under 42 U.S.C. Ch. 7. The total amount of a Social
Security substitute pension may not exceed the
maximum Federal old age and survivor benefit
payments, less any Federal old age and survivor
benefit payments received under 42 U.S.C. Ch. 7 for
employment covered under 42 U.S.C. Ch. 7.
(C) Military pension payments or military
survivor's benefit payments paid to individuals by
the United States with respect to service in the
Armed Forces of the United States.
(D) Distributions from a pension plan of an
employee of money contributed by the employee, but if
the employee cannot determine the basis of the money
contributed to the pension plan, 15% of the amount of
the distributions shall be deemed compensation.
(3) The term shall not include any of the following:
(i) Periodic payments for sickness and disability
other than regular wages received during a period of
sickness or disability.
(ii) Disability, retirement or other payments
arising under worker's compensation acts, occupational
disease acts and similar legislation by a government.
(iii) (Reserved).
(iii.1) Beginning after December 31, 2029,
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contributions made to a plan commonly recognized as an
old age or retirement benefit plan paid to persons
retired from service after reaching a specific age or
after a stated period of employment.
(iv) Payments commonly known as public assistance or
unemployment compensation payments by a governmental
agency.
(v) Payments to reimburse actual expenses.
(vi) Payments made by employers or labor unions,
including payments made under a cafeteria plan qualifying
under section 125 of the Internal Revenue Code of 1986,
for employee benefit programs covering hospitalization,
sickness, disability or death, supplemental unemployment
benefits or strike benefits if the program does not
discriminate in favor of highly compensated individuals
as to eligibility to participate, payments or program
benefits.
(vii) Compensation received by a member of the armed
forces of the United States serving in a combat zone.
(viii) Payments received by a foster parent for in-
home care of foster children from an agency or political
subdivision of the Commonwealth or an organization exempt
from Federal tax under section 501(c)(3) of the Internal
Revenue Code of 1954 which is licensed by the
Commonwealth or a political subdivision as a placement
agency.
(ix) Payments made by employers or labor unions for
employee benefit programs covering Social Security or
retirement.
(x) Personal use of an employer's owned or leased
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property or employer-provided services.
"Corporate item." An item, including income, gain or loss,
deduction or credit, determined at the Pennsylvania S
corporation level, which is required to be taken into account
for a Pennsylvania S corporation's taxable year.
"Corporation." For purposes of applying the provisions of
section 2203(a) (relating to classes of income) with respect to
a "reorganization" as defined in that section, the term shall
include any of the following:
(1) A business trust to which 15 Pa.C.S. Ch. 95
(relating to business trusts) applies.
(2) A common law business trust.
(3) A limited liability company that, for Federal income
tax purposes, is taxable as a corporation or an investment
company.
"Dependent." A child who is the dependent of a claimant for
purposes of section 151 of the Internal Revenue Code of 1986.
"Dividends." As follows:
(1) A distribution in cash or property made by a
corporation, association, business trust or investment
company with respect to the corporation's, association's,
business trust's or investment company's stock out of
accumulated earnings and profits or out of earnings and
profits of the year in which the dividend is paid.
(2) The term shall not include any of the following:
(i) A distribution of the stock of a corporation
made by the corporation originally issuing the stock to
its stockholders if the distribution is not treated as
personal income for Federal individual income tax
purposes.
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(ii) For taxable years beginning on or after January
1, 1993, a distribution made by an investment company out
of earnings and profits derived from interest that is
statutorily free from State and local taxation under
Article XXIX of the Tax Reform Code of 1971 or the laws
of the United States.
"Employee." An individual from whose wages an employer is
required under the Internal Revenue Code of 1986 to withhold
Federal income tax.
"Employer." An individual, partnership, association,
corporation, governmental body or agency or other entity that is
required under the Internal Revenue Code of 1986 to withhold
Federal income tax from wages paid to an employee.
"Fiduciary." A guardian, trustee, executor, administrator,
receiver, conservator or person acting in a trust or similar
capacity, whether domiciliary or ancillary.
"Health savings account." As defined in section 223(d) of
the Internal Revenue Code of 1986, as amended.
"Income." For a resident individual, estate or trust, the
term shall mean the same as compensation, net profits, gains,
dividends, interest or income under section 2203.
"Income from sources within this Commonwealth." As follows:
(1) For a nonresident individual, estate or trust, the
term shall mean the same as compensation, net profits, gains,
dividends, interest or income under section 2203 to the
extent that the income is earned, received or acquired from
sources within this Commonwealth:
(i) by reason of ownership or disposition of an
interest in real or tangible personal property in this
Commonwealth;
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(ii) in connection with a trade, profession,
occupation carried on in this Commonwealth or for the
rendition of personal services performed in this
Commonwealth;
(iii) as a distributive share of the income of an
unincorporated business, Pennsylvania S corporation,
profession, enterprise, undertaking or other activity as
the result of work done, services rendered or other
business activities conducted in this Commonwealth,
except as allocated to another state under regulations
promulgated by the department under this subpart;
(iv) from intangible personal property employed in a
trade, profession, occupation or business carried on in
this Commonwealth; or
(v) as gambling and lottery winnings by reason of a
wager placed in this Commonwealth, the conduct of a game
of chance or other gambling activity located in this
Commonwealth or the redemption of a lottery prize from a
lottery conducted in this Commonwealth, other than
noncash prizes of the Pennsylvania State Lottery.
(2) For a nonresident individual, estate or trust, the
term shall not include items of income specified in paragraph
(1) received or acquired from an investment company
registered with the Securities and Exchange Commission under
15 U.S.C. Ch. 2D Subch. I (relating to investment companies).
"Individual." As follows:
(1) A natural person.
(2) The term shall include a member of a partnership or
association and a shareholder of a Pennsylvania S
corporation.
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"Installment sales method of reporting." As follows:
(1) The method by which a taxpayer reports the gain upon
the sale of tangible personal property or real property when
at least one payment is to be received in a taxable year
following the taxable year of sale, whether the property is
sold or otherwise disposed of in an isolated transaction or
from the inventory of a dealer or broker.
(2) Taxpayers may elect to allocate the gain upon the
transactions in equal proportion to each payment to be
received. Taxpayers who do not elect to allocate the gain
upon the transactions in equal proportion to each payment
received shall report all gains upon the sale in the taxable
year in which the transaction occurred.
(3) For the purposes of this definition:
(i) The gain upon the transaction shall be the
difference between the sales price and the seller's basis
in the property.
(ii) The sales price shall be the face amount of the
evidence of indebtedness given in exchange for the
property sold or otherwise disposed of together with the
value of other consideration received by the seller. If
the evidence of indebtedness fails to state a price, the
evidence of indebtedness shall be valued at the fair
market value of the property sold, less the value of
other property or cash received in the same transaction.
(iii) The installment sales method of reporting
shall not be used for transactions made to lend money or
render services.
"Internal Revenue Code of 1986." The Internal Revenue Code
of 1986, as amended to January 1, 1997, unless the reference
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contains the phrase "as amended" and refers to no other date, in
which case the reference shall be to the Internal Revenue Code
of 1986 as it exists as of the time of application of this
subpart.
"Investment company." An incorporated or unincorporated
enterprise registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 (54 Stat.
789, 15 U.S.C. § 80a-1 et seq.).
"Nonresident estate or trust." An estate or trust which is
not a resident estate or trust. The term shall not include a
charitable trust or pension or profit sharing trust.
"Nonresident individual." An individual who is not a
resident of this Commonwealth.
"Partnership." A domestic or foreign general partnership,
joint venture, limited partnership, limited liability company,
business trust or other unincorporated entity that for Federal
income tax purposes is classified as a partnership.
"Partnership item." An item, including income, gain or loss,
deduction or credit determined at the partnership level, which
is required to be taken into account for a partnership's taxable
year.
"Pennsylvania S corporation." As follows:
(1) A small corporation that does not have a valid
election under section 2231 (relating to election by small
corporation) in effect.
(2) A qualified Subchapter S subsidiary owned by a
Pennsylvania S corporation shall be treated as a Pennsylvania
S corporation without regard to whether an election under
section 2231 has been made with respect to the subsidiary.
"Person." An individual, employer, association, fiduciary,
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partnership, corporation or other entity, estate or trust,
resident or nonresident. For the purpose of determining
eligibility for special tax provisions, the term shall mean an
individual.
"Poverty." An economic condition where the total amount of
poverty income is insufficient to adequately provide a claimant,
the claimant's spouse and dependent children with the
necessities of life.
"Poverty income." For the purpose of determining eligibility
for special tax provisions, all money or property, including
interest, gains or income derived from obligations which are
statutorily free from State or local taxation under the laws of
the United States or this Commonwealth, received of any nature
and from any source, but not including any of the following:
(1) Periodic payments for sickness and disability other
than regular wages received during a period of sickness or
disability.
(2) Disability, retirement or other payments arising
under workers' compensation acts, occupational disease acts
and similar legislation by a government.
(3) Payments commonly recognized as old age or
retirement benefits that are excluded under paragraph (2)(ii)
of the definition of "compensation" under this section.
(4) Payments commonly known as public assistance, or
unemployment compensation payments by a governmental agency.
(5) Payments to reimburse actual expenses.
(6) Payments made by employers or labor unions for
programs covering hospitalization, sickness, disability or
death, supplemental unemployment benefits, strike benefits,
Social Security and retirement.
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(7) Compensation received by a member of the armed
forces of the United States serving in a combat zone.
"Publicly traded partnership." An entity defined under
section 7704 of the Internal Revenue Code of 1986 with equity
securities registered with the Securities and Exchange
Commission under 15 U.S.C. § 781 (relating to registration
requirements for securities).
"Qualified student loan." As follows:
(1) Indebtedness incurred by a taxpayer to pay
educational expenses, which are:
(i) Incurred on behalf of the taxpayer at the time
the indebtedness is incurred.
(ii) Paid or incurred within a reasonable period of
time before or after the indebtedness is incurred.
(iii) Attributable to education furnished during a
period in which the recipient is a student.
(2) The term includes indebtedness used to refinance
indebtedness that qualifies as a qualified student loan.
(3) The term does not include indebtedness owed by a
taxpayer to a person related to the taxpayer.
"Qualified Subchapter S subsidiary." A domestic or foreign
corporation which, for Federal income tax purposes, is treated
as a qualified Subchapter S subsidiary as defined in section
1361(b)(3)(B) of the Internal Revenue Code of 1986, as amended
to January 1, 2005.
"Received." For the purpose of computation of income subject
to tax under this subpart, the term shall mean "received, earned
or acquired," and the phrase "received, earned or acquired"
shall be construed according to the method of accounting
required by the department under this subpart for computing and
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reporting income subject to the tax.
"Resident estate." The estate of a decedent who, at the time
of the decedent's death, was a resident individual.
"Resident individual." An individual who:
(1) is domiciled in this Commonwealth, unless the
individual maintains no permanent place of abode in this
Commonwealth, maintains a permanent place of abode elsewhere
and spends in the aggregate not more than 30 days of the
taxable year in this Commonwealth; or
(2) is not domiciled in this Commonwealth but maintains
a permanent place of abode in this Commonwealth and spends in
the aggregate more than 183 days of the taxable year in this
Commonwealth.
"Resident trust." Any of the following:
(1) A trust created by the will of a decedent who, at
the time of the decedent's death, was a resident individual.
(2) A trust created by, or consisting in whole or in
part of property transferred to a trust by a person who at
the time of the creation or transfer was a resident. The term
under this paragraph shall not include a charitable trust or
pension or profit-sharing trust.
"Small corporation." A corporation that has a valid election
in effect under Subchapter S of Chapter 1 of the Internal
Revenue Code of 1986, as amended to January 1, 2005.
"Social Security substitute pension." A pension that is
provided in lieu of old age and survivor benefit payments under
42 U.S.C. Ch. 7 (relating to Social Security) to a person whose
employment was not covered under the Social Security Act.
"Special tax provisions." A refund or forgiveness of all or
part of a claimant's liability under the provisions of this
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subpart.
"State." Except as provided under section 2303(a) (relating
to income taxes imposed by other states), a state or
commonwealth of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, a territory or possession of the
United States or a foreign country.
"Student loan interest." Interest paid during the taxable
year on a qualified student loan, including required and
voluntary interest payments, to attend a college, university,
vocational school or other postsecondary educational institution
eligible to participate in a student aid program administered by
the United States Department of Education.
"Tax." Includes interest, penalties, additions to tax and
the tax required to be withheld by an employer on compensation
paid, unless a more limited meaning is disclosed by the context.
"Taxable year." Any of the following:
(1) The taxable period on the basis of which a taxpayer
or claimant is required to file a Federal income tax return
under the Internal Revenue Code of 1986.
(2) If a taxpayer or claimant is not required to or does
not file a Federal income tax return, the calendar year. The
following shall apply:
(i) For the initial period during which the tax is
first imposed, the term shall mean the period beginning
June 1, 1971, and ending with the taxable period on the
basis of which a taxpayer or claimant is required to file
the taxpayer's Federal income tax return under the
Internal Revenue Code of 1986.
(ii) If the taxpayer or claimant is not required to
or does not file a Federal income tax return, December
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31, 1971.
"Taxpayer." As follows:
(1) An individual, estate or trust subject to the tax
imposed by this subpart.
(2) A partnership having a partner who is a taxpayer
under this title.
(3) A Pennsylvania S corporation having a shareholder
who is a taxpayer under this subpart and a person required to
withhold tax under this subpart.
CHAPTER 22
TAXATION GENERALLY
Subchapter
A. Imposition of Tax
B. Estates and Trusts
C. Partnerships
D. Pennsylvania S Corporations
E. Other Entities
F. Nonresident Individuals
SUBCHAPTER A
IMPOSITION OF TAX
Sec.
2201. Imposition of tax.
2202. Rate changes occurring during taxable year.
2203. Classes of income.
2204. Special tax provisions for poverty.
2205. Alternative special tax provision for poverty study.
2206. Pennsylvania ABLE Savings Program tax exemption.
§ 2201. Imposition of tax.
(a) Resident taxation.--Except as provided in subsection
(c), each resident individual, estate or trust shall be subject
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to, and shall pay for the privilege of receiving each of the
classes of income enumerated in section 2203 (relating to
classes of income), a tax upon each dollar of income received by
the resident during the resident's taxable year at the rate of
3.07%.
(b) Nonresident taxation.--Except as provided in subsection
(c), each nonresident individual, estate or trust shall be
subject to, and shall pay for the privilege of receiving each of
the classes of income enumerated in section 2203 from sources
within this Commonwealth, a tax upon each dollar of income
received by the nonresident during the nonresident's taxable
year at the rate of 3.07%.
(c) Classes of income.--The classes of income under section
2203 (relating to classes of income) received by a resident
trust, and the classes of income received by a nonresident trust
from sources within this Commonwealth, shall be taxable to the
grantor of the trust or another person to the extent the grantor
or other person is treated as the owner of the trust under
sections 671, 672, 673, 674, 675, 676, 677, 678 and 679 of the
Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1
et seq.), as amended, whether or not the income is distributed
or distributable to the beneficiaries of the trust or
accumulated.
§ 2202. Rate changes occurring during taxable year.
Notwithstanding the provisions of section 2201 (relating to
imposition of tax), the tax rate used for the computation of tax
for a taxable year where the rate changes during the taxable
year shall be the monthly weighted average of the rates
applicable during the taxable year, regardless of when during
the taxable year the income is received.
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§ 2203. Classes of income.
(a) Classes of income specified.--The classes of income are
as follows:
(1) Compensation, which shall be defined as salaries,
wages, commissions, bonuses and incentive payments, whether
based on profits or otherwise, fees, tips and similar
remuneration received for services rendered, whether directly
or through an agent and whether in cash or in property,
except income derived from the United States Government for
active duty outside this Commonwealth as a member of the
armed forces of the United States and income from the United
States Government or the Commonwealth for active State duty
for emergency within or outside this Commonwealth, including
duty ordered under 35 Pa.C.S. Ch. 76 (relating to Emergency
Management Assistance Compact). The following shall apply:
(i) Compensation of a cash-basis taxpayer shall be
considered received if the compensation is actually or
constructively received for Federal income tax purposes
consistent with United States Treasury regulations and
rulings under the Internal Revenue Code of 1986, as
amended, except that, for purposes of computing tax under
this subpart:
(A) Amounts lawfully deducted, not deferred, and
withheld from the compensation of employees shall be
considered received by the employee as compensation
at the time the deduction is made.
(B) Contributions to an employees' trust, pooled
fund or other arrangement which is not subject to the
claims of creditors of the employer made by an
employer on behalf of an employee or self-employed
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individual at the election of the employee or self-
employed individual under a cash or deferred
arrangement or salary reduction agreement shall be
deemed received by the employee or individual as
compensation at the time the contribution is made,
regardless of when the election is made or a payment
is received.
(C) A contribution to a plan by, on behalf of or
attributable to a self-employed person shall be
deemed received at the time the contribution is made.
(D) Employer contributions to a Roth IRA
custodial account or employee annuity shall be deemed
received, earned or acquired only when distributed,
when the plan fails to meet the requirements of
section 408A of the Internal Revenue Code of 1986, as
amended, or when the plan is not operated in
accordance with the requirements of section 408A of
the Internal Revenue Code of 1986, as amended.
(E) Employee contributions to an employees'
trust, pooled fund, custodial account or contract or
employee annuity may not be deducted or excluded from
compensation.
(F) This subparagraph shall not apply to
compensation excluded under paragraph (3)(iii.1) of
the definition of "compensation" in section 2102
(relating to definitions).
(ii) For purposes of determining when deferred
compensation of employees other than employees of exempt
organizations and State and local governments is required
to be included in income, the rules of sections 83, 451
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and 409A of the Internal Revenue Code of 1986, as
amended, shall apply.
(iii) For purposes of determining when deferred
compensation of employees of exempt organizations and
State and local governments is required to be included in
income, the rules of sections 83, 451, 457 and 409A of
the Internal Revenue Code of 1986, as amended, shall
apply.
(2) Net profits, which shall be defined as the net
income from the operation of a business, profession or other
activity, after provision for all costs and expenses incurred
in the conduct of the business, profession or other activity,
determined either on a cash or accrual basis in accordance
with accepted accounting principles and practices but without
deduction of taxes based on income. For purposes of
calculating net income under this paragraph, to the extent a
taxpayer properly deducts an amount under section 195(b)(1)
(A) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated under section 195(b)(1)(A) of the
Internal Revenue Code of 1986, as amended, the taxpayer shall
be permitted a deduction in equal amount in the same taxable
year.
(3) Net gains or income from disposition of property as
follows:
(i) The term shall be defined as net gains or net
income, less net losses, derived from the sale, exchange
or other disposition of property, including real
property, tangible personal property, intangible personal
property or obligations issued on or after the effective
date of this paragraph by any of the following:
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(A) The Commonwealth.
(B) A public authority, commission, board or
other agency created by the Commonwealth.
(C) A political subdivision of the Commonwealth
or a public authority created by a political
subdivision.
(D) The Federal Government as determined in
accordance with accepted accounting principles and
practices.
(ii) For the purpose of this subpart:
(A) For the determination of the basis of any
property, real and personal, if acquired prior to
June 1, 1971, the date of acquisition shall be
adjusted to June 1, 1971, as if the property had been
acquired on that date. If the property was acquired
after June 1, 1971, the actual date of acquisition
shall be used in determination of the basis.
(B) The terms "net gains or income" and "net
losses" shall not include gains or income or loss
derived from obligations which are statutorily free
from State or local taxation under Article XXIX of
the Tax Reform Code of 1971 or the laws of the United
States.
(iii) For the purpose of this subpart, the term
"sale, exchange or other disposition" shall not include
the exchange of stock or securities in a corporation that
is a party to a reorganization in pursuance of a plan of
reorganization, solely for stock or securities in the
corporation or in another corporation that is a party to
the reorganization and the transfer of property to a
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corporation by one or more persons solely in exchange for
stock or securities in the corporation if, immediately
after the exchange, the person or persons are in control
of the corporation. The following shall apply:
(A) For purposes of this subparagraph, stock or
securities issued for services shall not be
considered as issued in return for property.
(B) For purposes of this subparagraph, the term
"reorganization" shall mean any of the following:
(I) A statutory merger or consolidation.
(II) The acquisition by one corporation in
exchange solely for all or a part of its voting
stock, or in exchange solely for all or a part of
the voting stock of a corporation which is in
control of the acquiring corporation, of stock of
another corporation if, immediately after the
acquisition, the acquiring corporation has
control of the other corporation, whether or not
the acquiring corporation had control immediately
before the acquisition.
(III) The acquisition by one corporation, in
exchange solely for all or a part of its voting
stock, or in exchange solely for all or a part of
the voting stock of a corporation which is in
control of the acquiring corporation, of
substantially all of the properties of another
corporation. In determining whether the exchange
is solely for stock, the assumption by the
acquiring corporation of a liability of the other
or the fact that property acquired is subject to
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a liability shall be disregarded.
(IV) A transfer by a corporation of all or a
part of its assets to another corporation if,
immediately after the transfer, the transferor,
or one or more of the transferor's shareholders,
including persons who were shareholders
immediately before the transfer, or any
combination thereof, is in control of the
corporation to which the assets are transferred.
(V) A recapitalization.
(VI) A mere change in identity, form or
place of organization.
(C) The acquisition by one corporation, in
exchange for stock of a corporation, referred to in
this clause as a "controlling corporation," which is
in control of the acquiring corporation, of
substantially all of the properties of another
corporation which in the transaction is merged into
the acquiring corporation shall not disqualify a
transaction under clause (B)(I) if the transaction
would have qualified under clause (B)(I) if the
merger had been into the controlling corporation and
no stock of the acquiring corporation is used in the
transaction.
(D) A transaction otherwise qualifying under
clause (B)(I) shall not be disqualified by reason of
the fact that stock of a corporation, referred to in
this clause as a "controlling corporation," which,
before the merger, was in control of the merged
corporation is used in the transaction if, after the
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transaction, the corporation surviving the merger
holds substantially all of its properties and of the
properties of the merged corporation, other than
stock of the controlling corporation distributed in
the transaction, and, in the transaction, former
shareholders of the surviving corporation exchanged,
for an amount of voting stock of the controlling
corporation, an amount of stock in the surviving
corporation which constitutes control of the
corporation.
(E) For purposes of this subparagraph:
(I) The term "control" shall mean the
ownership of stock possessing at least 80% of the
total combined voting power of all classes of
stock entitled to vote and at least 80% of the
total number of shares of all other classes of
stock of the corporation.
(II) The term "a party to a reorganization"
shall include a corporation resulting from a
reorganization, and both corporations, in the
case of a reorganization resulting from the
acquisition by one corporation of stock or
properties of another. In the case of a
reorganization qualifying under clause (B)(I) by
reason of clause (C), the term "a party to a
reorganization" shall include the controlling
corporation referred to in clause (C).
(F) Notwithstanding any other provisions of this
subparagraph, upon every exchange or conversion, the
taxpayer's base for the stock or securities received
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shall be the same as the taxpayer's actual or
attributed base for the stock, securities or property
surrendered in exchange for the stock or securities
received.
(iv) For the purpose of this subpart, the term
"sale, exchange or other disposition" shall not include
any of the following:
(A) A transfer by a common trust fund described
in section 584 of the Internal Revenue Code of 1986
of all or substantially all of its assets to one or
more companies described in section 851 of the
Internal Revenue Code of 1986 in exchange for stock
or units of beneficial interest in the company or
companies to which the assets are transferred and the
distribution of the stock or units by the fund to its
participants in exchange for the participants'
interest in the fund, if no gain or loss is
recognized on the transfer or distribution for
Federal income tax purposes. Upon each exchange, the
taxpayer's base for the assets, stock or units
received shall be the same as the taxpayer's actual
or attributed base for the assets, stock, units or
interest surrendered in exchange for the assets,
stock or units.
(B) A transfer of an interest in an enterprise
treated as a partnership for purposes of this subpart
in exchange for an interest in another enterprise
treated as a partnership for purposes of this
subpart, a liquidation made in connection with a
transfer or an exchange made under a statutory
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merger, consolidation or division of enterprises so
treated unless taxable income or gain is recognized
for Federal income tax purposes. Upon each exchange,
the taxpayer's base for the interest received shall
be the same as the taxpayer's actual or attributed
base for the interest surrendered in exchange.
(v) For the purpose of this subpart, the term "net
gains or net income, less net losses," shall not include
a gain or loss from the sale, exchange or other
disposition of the taxpayer's principal residence. The
following shall apply:
(A) For purposes of this subparagraph, the term
"principal residence" shall mean the property that
has been owned and used by the taxpayer as the
taxpayer's principal residence for periods
aggregating two years or more during the five-year
period ending on the date of the sale, exchange or
disposition. The following apply:
(I) In the case of property only a portion
of which, during the five-year period ending on
the date of the sale, exchange or disposition,
has been owned or used by the taxpayer as the
taxpayer's principal residence for periods
aggregating two years or more, this subparagraph
shall apply with respect to the portion of the
gain from the sale, exchange or disposition of
the property as determined under regulations
prescribed by the department to be attributable
to that portion.
(II) In the case of a principal residence a
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portion of which has never been subject to the
allowance for depreciation, this subparagraph
shall apply with respect to the portion of the
gain from the sale, exchange or disposition of
the property as is determined under regulations
prescribed by the department to be attributable
to that portion.
(B) The provisions of this subparagraph shall
not apply to a sale, exchange or disposition if,
during the two-year period ending upon the date of
the sale, exchange or disposition, there was a prior
sale, exchange or disposition by the taxpayer of a
principal residence unless the sale, exchange or
disposition is by reason of a change in employment,
health or, to the extent provided in regulations,
unforeseen circumstances.
(C) This subparagraph shall not apply to any
sale, exchange or disposition made prior to January
1, 1998.
(vi) For purposes of this subpart, the term "net
gains or income" and "net losses" shall not include gains
or income or losses which are excluded from Federal
taxation under section 1400Z-2 of the Internal Revenue
Code of 1986, as amended. Net gains or net income, less
net losses, which are excluded under this subparagraph
shall be included in income to the extent they are
included in gross income under section 1400Z-2(b) of the
Internal Revenue Code of 1986, as amended. Section 1400Z-
2(c) of the Internal Revenue Code of 1986, as amended,
shall apply in the computation of net gains or net income
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and net losses.
(4) Net gains or income derived from or in the form of
rents, royalties, patents and copyrights.
(5) Dividends. The term "dividends" shall not include
gains or income or losses which are excluded from Federal
taxation under section 1400Z-2 of the Internal Revenue Code
of 1986, as amended. Gains or income or losses which are
excluded under this paragraph shall be included in income to
the extent they are included in gross income under section
1400Z-2(b) of the Internal Revenue Code of 1986, as amended.
Section 1400Z-2(c) of the Internal Revenue Code of 1986, as
amended, shall apply in the computation of net gains or net
income and net losses.
(6) Interest derived from obligations which are not
statutorily free from State or local taxation under the laws
of the United States or this Commonwealth, an amount paid
under contract of life insurance or endowment or annuity
contract which is includable in gross income for Federal
income tax purposes and an amount paid out of the Archer
Medical Savings Account (Archer MSA) or health savings
account that is includable in the gross income of an account
beneficiary for Federal income tax purposes.
(7) Gambling and lottery winnings other than noncash
prizes of the Pennsylvania State Lottery.
(8) Net gains or income derived through estates or
trusts. To the extent that income or gain is subject to tax
under one of the classes of income enumerated in this
section, the income or gain shall not be subject to tax under
another class.
(b) Computation of income.--Income shall be computed under
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the method of accounting on the basis of which the taxpayer
regularly computes income in keeping the taxpayer's books. If
the department determines that no method has been regularly used
or the method used does not clearly reflect income, the
computation of income shall be made under a method which, in the
opinion of the department, clearly reflects income.
(c) Depreciation deduction.--
(1) In computing income, a depreciation deduction shall
be allowed for the exhaustion, wear and tear and obsolescence
of property being employed in the operation of a business or
held for the production of income.
(2) Except as provided in paragraph (3), the deduction
must be reasonable and shall be computed in accordance with
the property's adjusted basis at the time placed in service,
reasonably estimated useful life and net salvage value at the
end of the property's reasonably estimated useful economic
life under the straight-line method or other method
prescribed by the department.
(3) A taxpayer may use any depreciation method, recovery
method or convention that is also used by the taxpayer in
determining Federal net taxable income if, when placed in
service, the property has the same adjusted basis for Federal
income tax purposes and the method or convention is allowable
for Federal income tax purposes at the time the property is
placed in service or under the Internal Revenue Code of 1986,
whichever is earlier.
(4) The basis of property shall be reduced, but not
below zero, for depreciation by the greater of the following:
(i) The amount deducted on a return and not
disallowed, but only to the extent the deduction results
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in a reduction of income.
(ii) The amount allowable using the straight-line
method of depreciation computed on the basis of the
property's adjusted basis at the time placed in service,
reasonably estimated useful life and net salvage value at
the end of the property's reasonably estimated useful
economic life, regardless of whether the deduction
results in a reduction of income.
(d) Section 179 Property.--The cost of property commonly
referred to as Section 179 Property may be treated as a
deductible expense only to the extent allowable under the
version of section 179 of the Internal Revenue Code in effect at
the time the property is placed in service or under section 179
of the Internal Revenue Code of 1986, whichever is earlier. The
basis of Section 179 Property shall be reduced, but not below
zero, for costs treated as a deductible expense. The amount of
the reduction shall be the amount deducted on a return and not
disallowed, regardless of whether the deduction results in a
reduction of income.
(e) Federal limitations.--This subpart shall be subject to
applicable Federal limitations on State income taxation.
(f) Applicability of Internal Revenue Code of 1986.--
(1) The requirements of sections 1031 and 1035 of the
Internal Revenue Code of 1986, as amended, shall be
applicable.
(2) Except as provided in this subpart and without
regard to sections 220(f)(4) and 223(f)(4) of the Internal
Revenue Code of 1986, the requirements of sections 106(b) and
(d), 220 and 223 of the Internal Revenue Code of 1986 shall
be applicable.
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(3) The provisions of section 1033 of the Internal
Revenue Code of 1986, as amended, shall be applicable.
(4) The provisions of section 451(f) of the Internal
Revenue Code of 1986, as amended, shall be applicable.
(g) Qualified tuition programs.--
(1) An amount paid as a contribution to a qualified
tuition program shall be deductible from taxable income on
the annual personal income tax return. The amount paid as a
contribution to a qualified tuition program allowable as a
deduction under this subsection shall be subject to an annual
limitation not to exceed the threshold for exclusion from
gifts as provided in section 2503(b) of the Internal Revenue
Code of 1986, as amended, per designated beneficiary. The
deduction shall not result in taxable income being less than
zero.
(2) (i) The following shall not be subject to tax under
this subpart:
(A) An amount distributed from a qualified
tuition program that is excludable from tax under
section 529(c)(3)(B) of the Internal Revenue Code of
1986, as amended.
(B) A rollover that is excludable from tax under
section 529(c)(3)(C) of the Internal Revenue Code of
1986, as amended.
(C) Undistributed earnings on a qualified
tuition program.
(D) The value of a medal awarded by or prize
money received from the United States Olympic
Committee on account of competition in the Olympic
Games or Paralympic Games.
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(E) An amount received by an employee through an
employer's matching contribution to an account as
defined under Article XIX-J of the Tax Reform Code of
1971.
(ii) A change in designated beneficiaries under
section 529(c)(3)(C) of the Internal Revenue Code of
1986, as amended, shall not constitute a taxable event
under this subpart.
(3) An amount distributed from a qualified tuition
program that is not described under paragraph (2) shall be
taxable under this subpart.
(4) For purposes of this subsection:
(i) The term "designated beneficiary" shall have the
same meaning as provided in section 529(e)(1) of the
Internal Revenue Code of 1986, as amended.
(ii) The term "qualified tuition program" shall have
the same meaning as provided in section 529(b)(1) of the
Internal Revenue Code of 1986, as amended.
(5) As follows:
(i) The classes of income under this section shall
not include an amount which is excluded from Federal
gross income under sections 276 and 278(a) of the COVID-
Related Tax Relief Act of 2020, enacted as Subtitle B of
Title II of Division N of the Consolidated Appropriations
Act, 2021 (Public Law 116-260, 134 Stat. 1182).
(ii) No deduction may be disallowed from an expense
that is otherwise deductible if the payment of the
expense results in forgiveness of a covered loan under
subparagraph (i).
(6) The classes of income under this section shall not
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include a payment received by an individual from the United
States under section 2201 of the Coronavirus Aid, Relief, and
Economic Security Act (Public Law 116-136, 134 Stat. 281) or
sections 272 and 273 of the Consolidated Appropriations Act,
2021.
(7) An amount received from the Federal or State
government or Norfolk Southern Railway, or an agent thereof,
as a result of the train derailment that occurred in East
Palestine, Ohio, on February 3, 2023, shall not be considered
income subject to the tax imposed by this subpart.
(h) Drilling and development costs.--
(1) Except as provided in paragraph (2), a person who
incurs intangible drilling and development costs as defined
in section 263(c) of the Internal Revenue Code of 1986, as
amended, and regulations under the Internal Revenue Code of
1986, as amended, shall capitalize the costs and recover them
over a 10-year period in the taxable year the costs are
incurred.
(2) A person may elect to currently expense up to one-
third of the costs in the taxable year in which the costs are
incurred and recover the remaining costs over a 10-year
period beginning in the taxable year the costs are incurred.
(i) Unconstitutional classes severable.--If one or more or
part of one or more classes of income under subsection (a) are
held to be unconstitutional by a final decision of a court of
last resort, the unconstitutional class or classes or part of a
class or classes of income shall be deemed severable, and the
tax imposed by this subpart shall apply with respect to all the
remaining classes of income or parts of classes of income
enumerated in subsection (a) as if the unconstitutional class or
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classes of income or part or parts of classes of income had not
been included in this subpart.
(j) Student loan interest.--The amount of student loan
interest paid during a taxable year by a resident individual
shall be deductible from taxable income on the annual personal
income tax return, provided that the deduction may not:
(1) exceed $2,500 per taxable year; and
(2) result in taxable income being less than zero.
(k) Depletion of natural deposit.--A person may claim a
deduction for depletion of a mine, oil and gas well and other
natural deposit in accordance with the provisions of sections
611, 612, 613, 613A, 614, 616 and 617 of the Internal Revenue
Code of 1986 (Public Law 99-514, 26 U.S.C. § 611 et seq.) in
effect on the effective date of this subsection.
§ 2204. Special tax provisions for poverty.
(a) Intent.--The General Assembly, in recognition of the
powers contained in section 2(b)(ii) of Article VIII of the
Constitution of Pennsylvania which provides for the
establishment as a class or classes of subjects of taxation the
property or privileges of persons who, because of poverty, are
determined to be in need of special tax provisions, declares as
its legislative intent and purpose to establish special tax
provisions as provided in this subpart.
(b) Public policy determination.--The General Assembly,
having determined that there are individuals in this
Commonwealth whose incomes are at a level that imposition of a
tax on those incomes would deprive the individuals and the
individuals' dependents of the bare necessities of life, and
having further determined that poverty is a relative concept
inextricably joined with actual income and the number of
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individuals dependent upon the income, deems it to be a matter
of public policy to provide special tax provisions for that
class of individuals designated to relieve the individuals'
economic burden.
(c) Eligibility.--For the taxable year 1974 and each year
thereafter, a claimant who meets the standards of eligibility
for poverty specified in this section shall be deemed a separate
class of subject of taxation and shall be entitled to the
benefit of the special provisions of this subpart.
(d) Determination of poverty.--A claim for special tax
provisions under this section shall be determined in accordance
with the following:
(1) If the poverty income of a claimant during an entire
taxable year is $6,500 or less, or, in the case of a married
claimant, if the joint poverty income of the claimant and the
claimant's spouse during an entire taxable year is $13,000 or
less, the claimant shall be entitled to a refund or
forgiveness of money which has been paid over to, or would
except for the provisions of this subpart be payable to, the
Commonwealth under this subpart, with an additional income
allowance of $9,500 for each dependent of the claimant. For
purposes of this subsection, a claimant shall not be
considered to be married if all of the following apply:
(i) The claimant and the claimant's spouse file
separate returns.
(ii) The claimant and the claimant's spouse lived
apart at all times during the last six months of the
taxable year or are separated pursuant to a written
separation agreement.
(2) If the poverty income of the claimant during an
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entire taxable year does not exceed the poverty income
limitations under paragraph (1) by more than the dollar
categories contained in this paragraph, the claimant shall be
entitled to a refund or forgiveness based on the percentage
prescribed in this paragraph of money which has been paid
over to, or would except for the provisions of this subpart
be payable to the Commonwealth under this subpart:
(i) Ninety percent if not more than $250.
(ii) Eighty percent if not more than $500.
(iii) Seventy percent if not more than $750.
(iv) Sixty percent if not more than $1,000.
(v) Fifty percent if not more than $1,250.
(vi) Forty percent if not more than $1,500.
(vii) Thirty percent if not more than $1,750.
(viii) Twenty percent if not more than $2,000.
(ix) Ten percent if not more than $2,250.
(3) If an individual has a taxable year of less than 12
months, the poverty income of the individual shall be
annualized in a manner as the department may prescribe.
§ 2205. Alternative special tax provision for poverty study.
(a) Study.--The General Assembly directs the Joint State
Government Commission to conduct or provide for a comprehensive
study to determine whether alternative forms of special tax
provisions for poverty would be more beneficial to persons who,
because of poverty, are determined to be in need of special tax
provisions.
(b) Comparison study.--The study shall include a comparison
between the special tax provisions for poverty specified under
section 2204 (relating to special tax provisions for poverty)
and the earned income credit allowable under section 32 of the
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Internal Revenue Code of 1986, as amended.
(c) Effects of Federal law.--The study shall consider any
effects of linking the alternative special tax provisions for
poverty to Federal law, including misuse that may be inherent in
the Federal program.
(d) Fiscal costs.--The study shall ascertain any differences
between the fiscal costs to the Commonwealth of the special tax
provisions for poverty specified under section 2204 and
projected fiscal costs of other alternative provisions.
(e) Consultants.--The Joint State Government Commission may
hire or retain consultants, utilizing a request for proposal
procedure, as necessary to assist in the performance of its
duties under this section.
(f) Report.--The executive director of the Joint State
Government Commission shall present a report summarizing the
results of this study to the chairperson and minority
chairperson of the Finance Committee of the Senate and the
chairperson and minority chairperson of the Finance Committee of
the House of Representatives after August 1, 2009, and before
September 1, 2009.
§ 2206. Pennsylvania ABLE Savings Program tax exemption.
(a) Exempt amounts.--The following shall be exempt from all
taxation by the Commonwealth and its political subdivisions:
(1) Undistributed earnings on an account.
(2) An amount distributed from an account that is not
included in gross income under section 529A(c)(1) of the
Internal Revenue Code of 1986.
(b) Contributions.--
(1) An amount contributed to an account shall be
deductible from the taxable income of the contributor under
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this subpart for the tax year the contribution was made.
(2) The total contributions made by a contributor during
a taxable year to all accounts that are allowable as a
deduction under this section may not exceed the dollar amount
under section 2503(b) of the Internal Revenue Code of 1986.
(3) The deduction may not result in the contributor's
taxable income being less than zero.
(4) The department and the Treasury Department shall
cooperate in verifying account information relating to
contributions to an account itemized by a contributor and the
contributor's specific contributions.
(c) Taxable income.--An amount that is distributed from an
account and not otherwise exempt from taxation under this
section shall be taxable income to the designated beneficiary
under this subpart.
(d) Change in beneficiaries.--A change in designated
beneficiaries under section 529A(c) of the Internal Revenue Code
of 1986 shall not constitute a taxable event.
(e) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Account." An ABLE savings account as defined in section 102
of the Pennsylvania ABLE Act.
"Contributor." An individual who makes a contribution to an
account as defined in section 102 of the Pennsylvania ABLE Act.
"Designated beneficiary." As defined in section 102 of the
Pennsylvania ABLE Act.
"Pennsylvania ABLE Act." The act of April 18, 2016 (P.L.128,
No.17), known as the Pennsylvania ABLE Act.
"Pennsylvania ABLE Savings Program." The program established
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under the Pennsylvania ABLE Act.
"Qualified disability expense." As defined in section 102 of
the Pennsylvania ABLE Act.
SUBCHAPTER B
ESTATES AND TRUSTS
Sec.
2211. Taxability of estates, trusts and their beneficiaries.
§ 2211. Taxability of estates, trusts and their beneficiaries.
(a) General rule.--Except as provided in subsection (b), the
income of a beneficiary of an estate or trust with respect to
the estate or trust shall consist of the part of the income or
gains received by the estate or trust for the estate's or
trust's taxable year ending within or with the beneficiary's
taxable year which, under the governing instrument and
applicable State law, is required to be distributed, paid or
credited to the beneficiary. The income or gains of the estate
or trust, if any, taxable to the estate or trust shall consist
of the income or gains received by the estate or trust which has
not been distributed or credited to the estate's or trust's
beneficiaries.
(b) Exception.--Subsection (a) shall not apply to the extent
the grantor or another person is taxable on the income of the
trust under section 2201(c) (relating to imposition of tax).
SUBCHAPTER C
PARTNERSHIPS
Sec.
2221. Taxability of partners.
2222. Tax treatment determined at partnership level.
2223. Tax imposed at partnership level.
§ 2221. Taxability of partners.
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Except as provided under section 2223 (relating to tax
imposed at partnership level), a partnership as an entity shall
not be subject to the tax imposed by this subpart, but the
income or gain of a member of a partnership with respect to the
partnership shall be subject to the tax, and the tax shall be
imposed on the member's share, whether or not distributed, of
the income or gain received by the partnership for the
partnership's taxable year ending within or with the member's
taxable year.
§ 2222. Tax treatment determined at partnership level.
The classification or character of a partnership item shall
be determined at the partnership level. This section shall not
prohibit the department from adjusting a partner's return.
§ 2223. Tax imposed at partnership level.
(a) Underreported income.--
(1) A partnership underreporting income by more than
$1,000,000 for a tax year shall be liable for the tax,
excluding interest, penalties or additions at the tax rate
applicable to the tax year, on the underreported income
without regard to the tax liability of the partners for the
underreported income.
(2) The department shall assess the partnership for the
tax on the underreported income.
(3) The department may not assess the partners for the
underreported income or the tax on the underreported income.
The partnership shall be required to provide an amended
statement to each partner as required under section 2707(c)
(3) (relating to requirements concerning returns, notices,
records and statements) of the partner's pro rata share of
the underreported income within 90 days of the assessment
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becoming final.
(4) Nothing in this subsection shall relieve the
partners of the partners' tax liability on the underreported
income.
(b) Credit.--Each partner shall be allowed a credit for the
partner's share of the tax assessed against the partnership
under subsection (a) and paid by the partnership. The credit
shall be allowed for the partner's taxable year in which the
underreported income was required to be reported.
(c) Applicability.--Subsection (a) shall apply to the
following partnerships:
(1) A partnership that has 11 or more partners who are
natural persons.
(2) A partnership that has at least one partner which is
a corporation, limited liability company, partnership or
trust.
(3) A partnership that has only partners who are natural
persons and elects to be subject to this subsection. The
election must be included on the partnership return to be
filed with the department.
(d) Publicly traded partnership.--This section shall not
apply to a publicly traded partnership.
(e) Tax liability.--Nothing under this section shall require
one partner to be liable for the payment of a tax liability of
another partner.
(f) Appeals.--Appeals involving a deficiency assessed under
this section may only be pursued by the partnership. A
reassessment of tax liability shall be binding on the partners.
SUBCHAPTER D
PENNSYLVANIA S CORPORATIONS
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Sec.
2231. Election by small corporation.
2232. Manner of making election.
2233. Effective years of election.
2234. Revocation of election.
2235. Termination by corporation ceasing to be small
corporation.
2236. Termination year.
2237. Taxable year of Pennsylvania S corporation.
2238. Income of Pennsylvania S corporation.
2239. Income of Pennsylvania S corporations taxed to
shareholders.
2240. Limitation on pass-through of losses to shareholders.
2241. Adjustments to basis of stock of shareholders.
2242. Distributions.
§ 2231. Election by small corporation.
A small corporation may elect not to be taxed as a
Pennsylvania S corporation. The election requires the consent of
100% of the outstanding shares of the small corporation on the
day on which the election is made. A qualified Subchapter S
subsidiary owned by a Pennsylvania S corporation shall be
treated as a Pennsylvania S corporation whether or not an
election has been made with respect to the subsidiary.
§ 2232. Manner of making election.
(a) General rule.--An election made under section 2231
(relating to election by small corporation) shall be made in the
manner prescribed by the department.
(b) Election.--An election under section 2231 may be made
for any taxable year at any time during the preceding taxable
year or at any time on or before the due date or extended due
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date of the small corporation's tax return under Article IV of
the Tax Reform Code of 1971.
§ 2233. Effective years of election.
An election made under section 2231 (relating to election by
small corporation) shall be effective for the taxable year for
which the election is made and for each succeeding taxable year
unless revoked or terminated.
§ 2234. Revocation of election.
(a) Revocation of election.--An election under section 2231
(relating to election by small corporation) may be revoked if
shareholders holding more than one-half of the shares of stock
of the corporation consent to the revocation. The corporation
and a successor corporation shall not be eligible to revoke an
election under this section for a taxable year prior to the
corporation's fifth taxable year which begins after the first
taxable year for which an election is effective unless the
corporation becomes a qualified Subchapter S subsidiary.
(b) Effective date of revocation.--A revocation under
subsection (a) shall be effective on the first day of the
taxable year if made on or before the 15th day of the third
month of the taxable year. If the revocation is made after that
date, the revocation shall be effective for the following
taxable year.
§ 2235. Termination by corporation ceasing to be small
corporation.
(a) Termination of status.--If a corporation ceases to be a
small corporation, the corporation's status as a Pennsylvania S
corporation shall terminate.
(b) Effective date of termination.--The termination shall be
effective on the date on which the corporation ceases to be a
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small corporation.
§ 2236. Termination year.
(a) Termination year generally.--The portion of the
termination year of a Pennsylvania S corporation ending before
the first day the termination is effective shall be treated as a
short taxable year for which the corporation is a Pennsylvania S
corporation.
(b) Termination year as short taxable year.--The portion of
the year beginning on the first day the termination is effective
shall be treated as a short taxable year for purposes of the tax
imposed under Article IV of the Tax Reform Code of 1971.
(c) Income and expenses.--The allocation of income and
expense items to be taken into consideration in each short year
shall be made in accordance with regulations as may be issued by
the department.
§ 2237. Taxable year of Pennsylvania S corporation.
The taxable year of a Pennsylvania S corporation shall be the
same taxable year that the corporation uses for Federal income
tax purposes.
§ 2238. Income of Pennsylvania S corporation.
(a) General rule.--A Pennsylvania S corporation shall not be
subject to the tax imposed under this subpart, except as
provided under subsection (f), but the shareholders of the
Pennsylvania S corporation shall be subject to the tax imposed
under this subpart.
(b) Imposed tax treated as loss.--If a tax is imposed on a
Pennsylvania S corporation or a qualified Subchapter S
subsidiary owned by a Pennsylvania S corporation under section
1374 of the Internal Revenue Code of 1986, as amended to January
1, 1997, or under Article IV or former Article VI of the Tax
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Reform Code of 1971 for a taxable year, for purposes of section
2239 (relating to income of Pennsylvania S corporations taxed to
shareholders), the amount of tax imposed shall be treated as a
loss sustained by the Pennsylvania S corporation during that
year. In the case of taxes imposed under section 1374 of the
Internal Revenue Code of 1986, as amended to January 1, 1997, or
Article VI of the Tax Reform Code of 1971, the character of the
loss shall be determined by allocating the loss proportionately
among the recognized built-in gains giving rise to the tax.
(c) Distribution of property.--If a Pennsylvania S
corporation makes a distribution of property, other than an
obligation of the corporation, with respect to the Pennsylvania
S corporation's stock and the fair market value of the property
exceeds the property's adjusted basis in the hands of the
corporation, gain shall be recognized on the distribution as if
the property had been sold to the distributee at its fair market
value.
(d) Computation of items.--An election which may affect the
computation of items derived from a Pennsylvania S corporation
shall be made by the corporation.
(e) Deduction.--A deduction, except a net loss deduction,
which was disallowed when a corporation was subject to the tax
imposed under Article IV of the Tax Reform Code of 1971 shall be
allowed in years in which the corporation is a Pennsylvania S
corporation to the same extent and in the same manner that the
deduction would have been allowed if the corporation had
remained subject to the tax imposed under Article IV of the Tax
Reform Code of 1971.
(f) Underreported income.--A Pennsylvania S corporation with
underreported income shall be subject to the following:
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(1) The following apply:
(i) A Pennsylvania S corporation underreporting
income by more than $1,000,000 for any tax year shall be
liable for the tax, excluding interest, penalties or
additions, at the tax rate applicable to the tax year, on
the underreported income without regard to the tax
liability of the shareholders for the underreported
income.
(ii) The department shall assess the Pennsylvania S
corporation for the tax on the underreported income. The
department shall not assess the shareholders for the
underreported income or the tax on the underreported
income. The Pennsylvania S corporation shall be required
to provide an amended statement to each shareholder as
required under section 2702 (relating to return of
Pennsylvania S corporation) of the shareholder's pro rata
share of the underreported income within 90 days of the
assessment becoming final.
(iii) Nothing in this subsection shall relieve the
shareholders of the shareholders' tax liability on the
underreported income.
(2) Each shareholder shall be allowed a credit for the
shareholder's share of the tax assessed against the
Pennsylvania S corporation under paragraph (1) and paid by
the Pennsylvania S corporation. The credit shall be allowed
for the shareholder's taxable year in which the underreported
income was required to be reported.
(3) Paragraph (1) shall apply to the following
Pennsylvania S corporations:
(i) A Pennsylvania S corporation which has 11 or
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more shareholders.
(ii) A Pennsylvania S corporation which elects to be
subject to this subsection. The election must be included
on the Pennsylvania S corporation return filed with the
department.
(4) Nothing in this section shall require one
shareholder to be liable for the payment of a tax liability
of another shareholder.
(5) Appeals involving the deficiency assessed under this
section may be filed only by the Pennsylvania S corporation.
A reassessment of tax liability shall be binding on the
shareholders.
§ 2239. Income of Pennsylvania S corporations taxed to
shareholders.
(a) Shareholder income or loss.--Each shareholder of a
Pennsylvania S corporation shall take into income the
shareholder's pro rata share of the income or loss in each
applicable class of income received by the corporation for its
taxable year ending within or with the shareholder's taxable
year.
(b) Calculation.--Each shareholder's pro rata share of an
item for any taxable year shall be the sum of the amounts
determined with respect to the shareholder by assigning an equal
portion of all items to each day of the taxable year and then
dividing that portion pro rata among the shares outstanding on
that day.
(c) Determination of items.--The character of an item
included in the shareholder's pro rata share shall be determined
as if the item were realized directly by the shareholder from
the source from which the item was realized by the corporation
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or incurred in the same manner as incurred by the corporation.
(d) Deduction.--With respect to a deduction allowed under
section 2238(e) (relating to income of Pennsylvania S
corporation), a nonresident shareholder shall be allowed the
deduction only to the extent that the previously disallowed
deduction would have been considered a deduction related to
income from sources within this Commonwealth, within the meaning
of section 2102 (relating to definitions), during the taxable
year when the deduction was disallowed.
(e) Subsidiary not separate corporation.--For the purposes
of this subpart, a qualified Subchapter S subsidiary owned by a
Pennsylvania S corporation shall not be treated as a separate
corporation. All assets, liabilities and items of income,
deduction and credit of the qualified Subchapter S subsidiary
shall be treated as assets, liabilities and items of income,
deduction and credit of the parent Pennsylvania S corporation.
§ 2240. Limitation on pass-through of losses to shareholders.
(a) Aggregate losses.--The aggregate amount of losses taken
into account by a shareholder of a Pennsylvania S corporation
under section 2239 (relating to income of Pennsylvania S
corporations taxed to shareholders) shall not exceed the sum of
the adjusted basis of the shareholder's stock in the
Pennsylvania S corporation, determined after applying section
2241(a) (relating to adjustments to basis of stock of
shareholders) for the taxable year and the shareholder's
adjusted basis of indebtedness of the Pennsylvania S corporation
to the shareholder, determined before applying section 2241(d)
for the taxable year.
(b) Carryover of losses prohibited.--There shall be no
carryover of losses by the shareholders of a Pennsylvania S
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corporation.
§ 2241. Adjustments to basis of stock of shareholders.
(a) Increase of basis.--The basis of the stock of a
shareholder in a Pennsylvania S corporation shall be increased
for any period by the shareholder's share of the corporation's
income, including nontaxable income, as determined under section
2239 (relating to income of Pennsylvania S corporations taxed to
shareholders).
(b) Decrease of basis.--The basis of a shareholder's stock
in a Pennsylvania S corporation shall be decreased for any
period, but not below zero, by a distribution by the corporation
to the shareholder which was not included in the income of the
shareholder under section 2242 (relating to distributions) and
by the shareholder's share of the corporation's losses as
determined under section 2239 to the extent that the loss
reduced the shareholder's income subject to the tax imposed
under this subpart or a tax measured by net income, imposed on
the shareholder by another state.
(c) Excess losses.--If for a taxable year a shareholder's
basis in the stock of a Pennsylvania S corporation is reduced to
zero, excess losses will reduce the shareholder's basis, but not
below zero, in any indebtedness of the Pennsylvania S
corporation to the shareholder.
(d) Reduced basis.--If a shareholder's basis in any
indebtedness is reduced under subsection (c), the reduction
shall be restored before the shareholder's basis in the
Pennsylvania S corporation's stock is increased.
§ 2242. Distributions.
(a) Distribution of property to shareholder.--A distribution
of property by a Pennsylvania S corporation which has no
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accumulated earnings and profits to a shareholder of the
corporation shall not be included in the shareholder's income to
the extent that it does not exceed the shareholder's adjusted
basis in the stock. An amount of the distribution in excess of
the adjusted basis in the stock shall be treated as a gain from
the sale, exchange or other disposition of property.
(b) Excess treated as dividend.--
(1) A distribution of property by a Pennsylvania S
corporation which has accumulated earnings and profits shall
be treated in the same manner as a distribution by a
Pennsylvania S corporation without earnings and profits to
the extent of the corporation's accumulated adjustment
account.
(2) The portion of the distribution in excess of the
accumulated adjustment account will be treated as a dividend
to the extent of the accumulated earnings and profits of the
corporation.
(3) A portion of the distribution in excess of the
accumulated earnings and profits of the corporation shall be
treated in the same manner as a distribution from a
Pennsylvania S corporation without accumulated earnings and
profits.
(c) Non-pro rata distribution.--In the case of a non-pro
rata distribution of property, the adjustment shall be limited
to an amount which bears the same ratio to the balance in the
account as the number of shares sold, exchanged or otherwise
disposed of bears to the number of shares in the corporation
outstanding immediately before the sale, exchange or
disposition.
(d) Definitions.--As used in this section, the following
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words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Accumulated adjustment account." An account of the
Pennsylvania S corporation which is cumulatively adjusted for
the most recent continuous period during which the corporation
has been a Pennsylvania S corporation by increasing the account
for corporate income and decreasing the account for corporate
losses and all distributions of property by the corporation to
the shareholders which were not included in the income of the
shareholders, provided that no adjustment shall be made for
income or loss not in any of the classes of income enumerated in
section 2203 (relating to classes of income) or for a
nondeductible expense.
SUBCHAPTER E
OTHER ENTITIES
Sec.
2251. Treatment of unincorporated entities with single owners.
§ 2251. Treatment of unincorporated entities with single
owners.
Unless subject to tax under Article IV of the Tax Reform Code
of 1971, an unincorporated entity that has a single owner shall
be disregarded as an entity separate from the entity's owner.
SUBCHAPTER F
NONRESIDENT INDIVIDUALS
Sec.
2261. Nonresident individuals and taxable income.
2262. Spouses.
2263. Allocation of income of nonresident.
§ 2261. Nonresident individuals and taxable income.
The income of a nonresident individual shall be the part of
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the nonresident individual's income derived from sources within
this Commonwealth as defined in this subpart.
§ 2262. Spouses.
(a) Separate return.--For spouses who are both nonresidents
of this Commonwealth and subject to tax under this subpart, if
the income of either spouse is determined on a separately filed
return, each spouse's income from sources within this
Commonwealth shall be separately determined.
(b) One spouse a nonresident.--If a spouse is a nonresident
of this Commonwealth and the other spouse is a resident of this
Commonwealth, separate taxes shall be determined on the spouses'
separate incomes on forms as the department shall prescribe,
unless both spouses elect to determine the spouses' joint income
as if both spouses were residents of this Commonwealth, in which
case the spouses' tax liabilities shall be joint and several.
§ 2263. Allocation of income of nonresident.
If a nonresident taxpayer earns, receives or acquires income
from sources partly within and partly outside this Commonwealth
or engages in a business, trade, profession or occupation partly
within and partly outside this Commonwealth and that portion of
the income derived from or connected with sources within this
Commonwealth cannot readily or accurately be ascertained, the
department shall by regulation prescribe uniform rules for
apportionment or allocation of the amount of the taxpayer's
income as fairly and equitably represents income derived from
sources within this Commonwealth and subject to tax under this
subpart.
CHAPTER 23
CREDITS AGAINST TAX
Sec.
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2301. Tax withheld.
2302. Tax paid under previous act.
2303. Income taxes imposed by other states.
§ 2301. Tax withheld.
The amount withheld under section 2502 (relating to
requirement of withholding tax) shall be allowed to the taxpayer
from whose income the tax was withheld as a credit against the
tax imposed on the taxpayer by this subpart.
§ 2302. Tax paid under previous act.
The amount of tax withheld from an employee and paid over to
the Commonwealth or paid over by a taxpayer as an estimated
payment under former Article III of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971, which was
repealed by the act of August 31, 1971 (P.L.362, No.93), shall
be held as a credit against the tax imposed by former Article
III of the Tax Reform Code of 1971.
§ 2303. Income taxes imposed by other states.
(a) Credit.--
(1) A resident taxpayer, before allowance of a credit
under section 2301 (relating to tax withheld), shall be
allowed a credit against the tax otherwise due under this
subpart for the amount of income tax, wage tax or tax on or
measured by gross or net earned or unearned income imposed on
the resident taxpayer or on a Pennsylvania S corporation in
which the resident taxpayer is a shareholder, to the extent
of the resident taxpayer's pro rata share of the tax
determined under section 2239 (relating to income of
Pennsylvania S corporations taxed to shareholders), by
another state with respect to income which is also subject to
tax under this subpart.
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(2) For purposes of this subsection, the term "state"
shall only include a state of the United States, the District
of Columbia, the Commonwealth of Puerto Rico and a territory
or possession of the United States.
(b) Credit limit.--The credit provided under this section
shall not exceed the proportion of the tax otherwise due under
this subpart that the amount of the taxpayer's income subject to
tax by the other jurisdiction bears to the taxpayer's entire
taxable income.
CHAPTER 24
CONTRIBUTIONS OF REFUNDS BY CHECKOFF
Subchapter
A. Preliminary Provisions
B. Contributions
SUBCHAPTER A
PRELIMINARY PROVISIONS
Sec.
2401. Definitions.
2402. Operational provisions.
§ 2401. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Individual income tax." The tax imposed under this subpart.
§ 2402. Operational provisions.
(a) Expiration.--Except as described in subsection (b), a
checkoff established under this chapter and applicable for the
first time in a taxable year beginning after December 31, 2009,
shall expire four years after the beginning of the first taxable
year.
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(b) No expiration.--Notwithstanding subsection (a), the
checkoffs established under the following sections shall not
expire:
(1) Section 2411 (relating to contributions to breast
and cervical cancer research).
(2) Section 2412 (relating to contributions for wild
resource conservation).
(3) Section 2413 (relating to contributions for organ
and tissue donation awareness).
(4) Section 2414 (relating to contributions for juvenile
diabetes cure research).
(5) Section 2415 (relating to contributions for military
family relief assistance).
(6) Section 2416 (relating to contributions for
Children's Trust Fund).
(7) Section 2417 (relating to contributions for American
Red Cross).
SUBCHAPTER B
CONTRIBUTIONS
Sec.
2411. Contributions for breast and cervical cancer research.
2412. Contributions for wild resource conservation.
2413. Contributions for organ and tissue donation awareness.
2414. Contributions for juvenile diabetes cure research.
2415. Contributions for military family relief assistance.
2416. Contributions for Children's Trust Fund.
2417. Contributions for American Red Cross.
2418. Contributions for tuition account programs.
2419. Contributions for pediatric cancer research.
2420. Contributions for Veterans' Trust Fund.
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§ 2411. Contributions for breast and cervical cancer research.
(a) Contribution.--The department shall provide a space on
the Pennsylvania individual income tax return form where an
individual may voluntarily designate a contribution of any
amount to breast and cervical cancer research.
(b) Deduction from refund.--The amount designated on the
Pennsylvania individual income tax return form shall be deducted
from the tax refund to which the individual is entitled and
shall not constitute a charge against the income tax revenues
due to the Commonwealth.
(c) Total designation.--The department shall determine
annually the total amount designated under this section, less
reasonable administrative costs, and shall report the amount to
the State Treasurer who shall transfer the amount from the
General Fund to the Pennsylvania Breast Cancer Coalition.
(d) Instructions for contributions.--The department shall
provide adequate information concerning the checkoff for breast
and cervical cancer research in the instructions which accompany
State income tax return forms, which shall include the listing
of an address furnished to it by the Department of Health to
which contributions may be sent by taxpayers wishing to
contribute to this effort but who do not receive refunds. The
Pennsylvania Breast Cancer Coalition shall conduct a public
information campaign on the opportunity to contribute to breast
and cervical cancer research to Pennsylvania taxpayers.
(e) Report.--The Pennsylvania Breast Cancer Coalition shall
report annually to the chairperson and minority chairperson of
the Health and Human Services Committee of the Senate and the
chairperson and minority chairperson of the Health Committee of
the House of Representatives the amount received from the
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checkoff plan and how the money was utilized.
(f) Appropriation.--The General Assembly may appropriate
funds for breast and cervical cancer research.
§ 2412. Contributions for wild resource conservation.
(a) Contribution.--The department shall provide a space on
the Pennsylvania individual income tax return form where an
individual may voluntarily designate a contribution of any
amount to the Wild Resource Conservation Fund established under
section 5 of the act of June 23, 1982 (P.L.597, No.170), known
as the Wild Resource Conservation Act.
(b) Deduction from refund.--The amount designated by an
individual on the income tax return form shall be deducted from
the tax refund to which the individual is entitled and shall not
constitute a charge against the income tax revenues due to the
Commonwealth.
(c) Total designation.--The department shall determine
annually the total amount designated under this section and
shall report the amount to the State Treasurer who shall
transfer the amount from the General Fund to the Wild Resource
Conservation Fund for use as provided in the Wild Resource
Conservation Act. The department shall be reimbursed from the
fund for administrative costs incurred above and beyond the cost
savings the department realizes as a result of individual total
refund designations.
(d) Instructions for contributions.--The department shall
provide adequate information concerning the Wild Resource
Conservation Fund in the instructions which accompany State
income tax return forms, which shall include the listing of an
address furnished to it by the Wild Resource Conservation Board
to which contributions may be sent by taxpayers wishing to
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contribute to the fund but who do not receive refunds.
(e) Applicability.--This section shall apply to taxable
years beginning on or after January 1, 1997.
§ 2413. Contributions for organ and tissue donation awareness.
(a) Contribution.--The department shall provide a space on
the Pennsylvania individual income tax return form where an
individual may voluntarily designate a contribution of any
amount to the Governor Robert P. Casey Memorial Organ and Tissue
Donation Awareness Trust Fund established under 20 Pa.C.S. §
8622 (relating to the Governor Robert P. Casey Memorial Organ
and Tissue Donation Awareness Trust Fund).
(b) Deduction from refund.--The amount designated by an
individual on the Pennsylvania individual income tax return form
shall be deducted from the tax refund to which the individual is
entitled and shall not constitute a charge against the income
tax revenues due to the Commonwealth.
(c) Total designation.--The department shall annually
determine the total amount designated under this section and
shall report the amount to the State Treasurer who shall
transfer the amount to the Governor Robert P. Casey Memorial
Organ and Tissue Donation Awareness Trust Fund.
(d) Instructions for contributions.--The department shall
provide on its forms or in the instructions which accompany
Pennsylvania individual income tax return forms adequate
information concerning the Governor Robert P. Casey Memorial
Organ and Tissue Donation Awareness Trust Fund, which shall
include the listing of an address furnished to it by the Organ
Donation Advisory Committee to which contributions may be sent
by taxpayers wishing to contribute to the fund but who do not
receive refunds.
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(e) Applicability.--This section shall apply to taxable
years beginning on or after January 1, 1997.
§ 2414. Contributions for juvenile diabetes cure research.
(a) Contribution.--The department shall provide a space on
the Pennsylvania individual income tax return form where an
individual may voluntarily designate a contribution of any
amount for juvenile diabetes cure research related to:
(1) Restoring normal blood sugar levels.
(2) Preventing and reversing complications.
(3) Preventing juvenile diabetes.
(b) Deduction from refund.--The amount designated on the
Pennsylvania individual income tax return form shall be deducted
from the tax refund to which the individual is entitled and
shall not constitute a charge against the income tax revenues
due to the Commonwealth.
(c) Total designation.--
(1) The department shall determine annually the total
amount designated under this section, less reasonable
administrative costs, and shall report the amount to the
State Treasurer, who shall transfer the amount to a
restricted revenue account within the General Fund to be used
by the Department of Health for aiding juvenile diabetes cure
research.
(2) The Department of Health shall distribute the
amounts to institutions of higher education and independent
research institutes of this Commonwealth to support projects
that have been subject to an established peer and scientific
review process identical or similar to the National
Institutes of Health review system.
(d) Instructions for contributions.--The department shall
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provide adequate information concerning the checkoff for
juvenile diabetes cure research in the instructions which
accompany the Pennsylvania income tax return forms, which shall
include the listing of an address furnished to it by the
Department of Health to which contributions may be sent by
taxpayers wishing to contribute to this effort but who do not
receive refunds.
(e) Report.--The Department of Health shall report annually
to the chairperson and minority chairperson of the Health and
Human Services Committee of the Senate and the chairperson and
minority chairperson of the Health Committee of the House of
Representatives the amount received from the checkoff plan and
how the money was utilized.
§ 2415. Contributions for military family relief assistance.
(a) Contribution.--Beginning with taxable years ending after
December 31, 2004, the department shall provide a space on the
Pennsylvania individual income tax return form where an
individual may voluntarily designate a contribution of any
amount to a fund for military family relief assistance.
(b) Deduction from refund.--The amount designated on the
Pennsylvania individual income tax return form shall be deducted
from the tax refund to which the individual is entitled and
shall not constitute a charge against the income tax revenues
due to the Commonwealth.
(c) Total designation.--The department shall determine
annually the total amount designated under this section, less
reasonable administrative costs, and shall report the amount to
the State Treasurer who shall transfer the amount to a
restricted revenue account within the General Fund to be used by
the Department of Military and Veterans Affairs for
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contributions to military family relief assistance as provided
by statute.
(d) Instructions for contributions.--The department shall
provide adequate information concerning the checkoff for
military family relief assistance in the instructions which
accompany the Pennsylvania income tax return forms, which shall
include the listing of an address furnished to it by the
Department of Military and Veterans Affairs to which
contributions may be sent by taxpayers wishing to contribute to
this effort but who do not receive refunds.
(e) Report.--The Department of Military and Veterans Affairs
shall report annually to the chairperson and minority
chairperson of the Veterans Affairs and Emergency Preparedness
Committee of the Senate and the chairperson and minority
chairperson of the Veterans Affairs and Emergency Preparedness
Committee of the House of Representatives the amount received
from the checkoff plan and how the money was utilized.
§ 2416. Contributions for Children's Trust Fund.
(a) Contribution.--The department shall provide a space on
the Pennsylvania individual income tax return form where an
individual may voluntarily designate a contribution of any
amount to the Children's Trust Fund established in section 8 of
the act of December 15, 1988 (P.L.1235, No.151), known as the
Children's Trust Fund Act.
(b) Deduction from refund.--The amount designated under
subsection (a) by an individual on the income tax return form
shall be deducted from the tax refund to which the individual is
entitled and shall not constitute a charge against the income
tax revenues due to the Commonwealth.
(c) Total designation.--The department shall determine
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annually the total amount designated under this section, less
reasonable administrative costs, and shall report the amount to
the State Treasurer, who shall transfer the amount from the
General Fund to the Children's Trust Fund.
§ 2417. Contributions for American Red Cross.
(a) Contribution.--The department shall provide a space on
the Pennsylvania individual income tax return form where an
individual may voluntarily designate a contribution of any
amount to the American Red Cross established under 36 U.S.C. Ch.
3001 (relating to the American National Red Cross).
(b) Deduction from refund.--The amount designated under
subsection (a) by an individual on the income tax return form
shall be deducted from the tax refund to which the individual is
entitled and shall not constitute a charge against the income
tax revenues due to the Commonwealth.
(c) Total designation.--The department shall determine
annually the total amount designated under this section, less
reasonable administrative costs, and shall report the amount to
the State Treasurer, who shall transfer the amount from the
General Fund to the American Red Cross.
§ 2418. Contributions for tuition account programs.
(a) Contribution.--Beginning with the 2016 Pennsylvania
individual income tax return, the department shall provide a
space on the income tax return form by which a taxpayer who is
an account owner may voluntarily designate a contribution to a
beneficiary's Tuition Account Guaranteed Savings Program or the
Tuition Account Investment Program established under the act of
April 3, 1992 (P.L.28, No.11), known as the Tuition Account
Programs and College Savings Bond Act.
(b) Deduction from refund.--The amount designated under
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subsection (a) by a taxpayer on the income tax return form shall
be deducted from the tax refund to which the individual is
entitled and shall not constitute a charge against the income
tax revenues due to the Commonwealth.
(c) Total designation.--The department shall determine
annually the amount designated under this section and shall
report the amount to the State Treasurer, who shall transfer the
amount from the General Fund to the appropriate account within
the Tuition Account Guaranteed Savings Program or the Tuition
Account Investment Program.
(d) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Account owner." As defined in section 302 of the Tuition
Account Programs and College Savings Bond Act.
"Beneficiary." As defined in section 302 of the Tuition
Account Programs and College Savings Bond Act.
§ 2419. Contributions for pediatric cancer research.
(a) Contribution.-- The department shall provide a space on
the Pennsylvania individual income tax return form where an
individual may voluntarily designate a contribution of any
amount to be utilized for pediatric cancer research. On or
before December 1 of each year, the Secretary of Health shall
designate hospitals within this Commonwealth conducting
pediatric cancer research that are eligible to receive funding
under this section for the following calendar year.
(b) Deduction from refund.--The amount designated on the
individual income tax return form shall be deducted from the tax
refund to which the individual is entitled and shall not
constitute a charge against the income tax revenues due to the
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Commonwealth.
(c) Total designation.--The department shall determine
annually the total amount designated under this section, less
reasonable administrative costs, and shall report the amount to
the State Treasurer, who shall transfer the amount from the
General Fund to the Pennsylvania Cancer Control, Prevention and
Research Advisory Board within the Department of Health.
(d) Instructions for contributions.--The department shall
provide adequate information concerning the checkoff for
pediatric cancer research in the instructions that accompany
State income tax return forms, which shall include the listing
of an address furnished to it by the Department of Health to
which contributions may be sent by taxpayers wishing to
contribute to this effort but who do not receive refunds. The
Department of Health shall conduct a public information campaign
on the availability of this opportunity to Pennsylvania
taxpayers.
(e) Report.--The Department of Health shall report annually
to the chairperson and minority chairperson of the Health and
Human Services Committee of the Senate and the chairperson and
minority chairperson of the Health Committee of the House of
Representatives the amount received from the checkoff plan and
how the money was utilized.
§ 2420. Contributions for Veterans' Trust Fund.
(a) Contribution.--For taxable years beginning after
December 31, 2019, the department shall provide a space on the
Pennsylvania individual income tax return form where an
individual may voluntarily designate a contribution, in any
amount, to the Veterans' Trust Fund.
(b) Deduction from refund.--The amount designated on the
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individual income tax return shall be deducted from the tax
refund to which the individual is entitled and shall not
constitute a charge against the income tax revenues due to the
Commonwealth.
(c) Total designation.--The department shall determine
annually the total amount designated under this section, less
reasonable administrative costs, and shall report the amount to
the State Treasurer who shall transfer the amount to the
Veterans' Trust Fund.
(d) Instructions for contributions.--The department shall
provide adequate information concerning the checkoff for the
Veterans' Trust Fund in its instructions that accompany the
State income tax return forms, which shall include the listing
of an address furnished by the Department of Military and
Veterans Affairs to which contributions may be sent by taxpayers
wishing to contribute to this effort but who do not receive
refunds.
(e) Report.--The Department of Military and Veterans Affairs
shall report annually to the respective committees of the Senate
and the House of Representatives which have jurisdiction over
military and veterans affairs on the amount received from the
checkoff plan and how the funds were utilized.
CHAPTER 25
WITHHOLDING OF TAX
Subchapter
A. Withholding Tax Generally
B. Withholding Tax on Income from Sources Within
Commonwealth
SUBCHAPTER A
WITHHOLDING TAX GENERALLY
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Sec.
2501. Definitions.
2502. Requirement of withholding tax.
2503. Withholding tax requirement for nonemployer payors.
2504. Information statement.
2505. Information statement for nonemployer payors.
2506. Information statement for payees.
2507. Time for filing withholding returns.
2508. Time for filing payors' returns.
2509. Payment of taxes withheld.
2510. Payment of taxes withheld for nonemployer payors.
2511. Liability for withheld taxes.
2512. Payor's liability for withheld taxes.
2513. Failure to withhold.
2514. Bulk and auction sales and transfers and notice.
2515. Payor's failure to withhold.
2516. Designation of third parties to perform acts required of
employers.
2517. When withholding not required.
§ 2501. Definitions.
The following words and phrases when used in this subchapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Payee." The person receiving the payments subject to
withholding under this subchapter.
"Payments." The term shall not include a partner or
shareholder's distributive share of income from a partnership or
Pennsylvania S corporation.
"Payor." The person required to withhold under this
subchapter.
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§ 2502. Requirement of withholding tax.
(a) General rule.--An employer maintaining an office or
transacting business within this Commonwealth and making payment
of compensation to a resident individual or a nonresident
individual taxpayer performing services on behalf of the
employer within this Commonwealth shall deduct and withhold from
the employee's compensation for each payroll period a tax
computed in a manner as to result in withholding from the
employee's compensation during each calendar year an amount
substantially equivalent to the tax reasonably estimated to be
due for the year with respect to the compensation. The method of
determining the amount to be withheld shall be prescribed by
regulations of the department.
(b) Lottery winnings.--If the Pennsylvania State Lottery or
a person making a Pennsylvania State Lottery prize payment in
the form of an annuity is required to withhold Federal income
tax under section 3402 of the Internal Revenue Code of 1986 or
backup withholding under section 3406 of the Internal Revenue
Code of 1986 from a gambling or lottery prize payment awarded by
the Pennsylvania State Lottery that is taxable under this
chapter, the Pennsylvania State Lottery or the person making the
annuity payment shall deduct and withhold from the prize payment
an amount equal to the amount of the prize payment subject to
withholding under section 3402 or 3406 of the Internal Revenue
Code of 1986 multiplied by the tax rate in effect under this
subpart at the time the prize payment is made.
§ 2503. Withholding tax requirement for nonemployer payors.
(a) General requirements.--Notwithstanding the provisions of
section 2502 (relating to requirement of withholding tax), a
person shall deduct and withhold from the payments an amount
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equal to the net amount of the payments multiplied by the tax
rate specified under section 2201(b) (relating to imposition of
tax) if the person:
(1) makes payments of income from sources within this
Commonwealth described in section 2203(a)(1) or (2) (relating
to classes of income) to either a nonresident individual or
an entity that is disregarded under section 2251 (relating to
treatment of unincorporated entities with single owners) that
has a nonresident member; and
(2) is required under section 2707(f)(1) (relating to
requirements concerning returns, notices, records and
statements) to file a copy of form 1099-MISC or 1099-NEC with
the department regarding the payments.
(b) Optional withholding.--Withholding of tax by payors is
optional and at the discretion of the payor with respect to
payees who receive payments of less than $5,000 annually from
the payor.
(c) Nonapplicability.--This section shall not apply to
payments made by a payor to a payee if the payor is any of the
following:
(1) The United States or an agency or instrumentality of
the United States.
(2) The Commonwealth or an agency, instrumentality or
political subdivision of the Commonwealth.
(d) Regulations.--The department may prescribe regulations
to implement and clarify the withholding requirement specified
in this section.
§ 2504. Information statement.
(a) Statement.--
(1) An employer required to deduct and withhold tax
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under section 2502(a) (relating to requirement of withholding
tax) shall furnish to each employee paid compensation during
the calendar year a written statement in the manner and form
prescribed by the department showing:
(i) The amount of compensation paid by the employer
to the employee.
(ii) The amount deducted and withheld as tax under
section 2502(a).
(iii) Other information as the department shall
prescribe.
(2) Each statement required by this section for a
calendar year shall be furnished to the employee on or before
January 31 of the year succeeding the calendar year.
(3) If the employee's employment is terminated before
the close of the calendar year, the employer shall furnish
the statement to the employee at any time after the
termination but no later than January 31 of the year
succeeding the calendar year.
(4) If an employee who is terminated before the close of
the calendar year requests the employer in writing to furnish
the employee the statement at an earlier time and, if there
is no reasonable expectation on the part of the employer and
employee of further employment during the calendar year, the
employer shall furnish the statement to the employee on or
before the 30th day after the day of the request or the 30th
day after the day on which the last payment of wages is made,
whichever occurs later.
(b) Lottery winnings.--A person required to deduct and
withhold tax under section 2502(b) shall report the prize and
the amount of withholding to the taxpayer on Internal Revenue
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Service Form W-2G or similar form used for reporting Federal
income tax withholding from the prize.
§ 2505. Information statement for nonemployer payors.
(a) Form to be furnished.--A payor required to deduct and
withhold tax under section 2503 (relating to withholding tax
requirement for nonemployer payors) shall furnish to a payee to
whom the payor has paid income from sources within this
Commonwealth during the calendar year a copy of form 1099-MISC
or 1099-NEC required under section 2707(f)(1) (relating to
requirements concerning returns, notices, records and
statements).
(b) Time frame.--The copy of form 1099-MISC or 1099-NEC
required by this section for each calendar year shall be
forwarded to the payee on or before March 1 of the year
succeeding the calendar year.
§ 2506. Information statement for payees.
A payee receiving a copy of form 1099-MISC or 1099-NEC from a
payor under section 2505 (relating to information statement for
nonemployer payors) shall file a duplicate of the form with the
payee's State income tax return.
§ 2507. Time for filing withholding returns.
(a) Quarterly filing.--
(1) An employer required to deduct and withhold tax
under section 2502(a) (relating to requirement of withholding
tax) shall file a quarterly withholding return on or before
the last day of April, July, October and January for the
three months ending the last day of March, June, September
and December.
(2) Quarterly returns shall be filed with the department
at the department's main office or at any branch office that
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the department designates for filing returns.
(b) Time frame for filing.--A person required to deduct and
withhold tax under section 2502(b) shall file a withholding tax
return at the same time the person is required to file the
person's annual return of withheld Federal income tax,
designated as IRS Form 945, from nonpayroll payments. The return
shall be filed with the department.
§ 2508. Time for filing payors' returns.
(a) Quarterly filing.--A payor required to deduct and
withhold tax under section 2503 (relating to withholding tax
requirement for nonemployer payors) shall file a quarterly
withholding return on or before the last day of April, July,
October and January for each three-month period ending the last
day of March, June, September and December.
(b) Manner of filing.--The quarterly returns shall be filed
with the department in the manner prescribed by regulation.
§ 2509. Payment of taxes withheld.
(a) Payment of tax by employer.--
(1) An employer withholding tax under section 2502(a)
(relating to requirement of withholding tax) shall pay over
to the department or to a depository designated by the
department the tax required to be deducted and withheld under
section 2502(a). The following shall apply:
(i) If the aggregated amount required to be deducted
and withheld by an employer for a calendar year is
expected to be less than $1,200, the employer shall file
a return and pay the tax on or before the last day for
filing a quarterly return under section 2507 (relating to
time for filing withholding returns).
(ii) If the aggregated amount required to be
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deducted and withheld by an employer for a calendar year
is expected to be $1,200 or more but less than $4,000,
the employer shall pay the tax monthly on or before the
15th day of the month succeeding the months of January to
November, inclusive, and on or before the last day of
January following the month of December.
(iii) If the aggregated amount required to be
deducted and withheld by an employer for a calendar year
is expected to be $4,000 or more but less than $20,000,
the employer shall pay the tax semimonthly within three
banking days after the close of the semimonthly period.
(iv) If the aggregated amount required to be
deducted and withheld by an employer for a calendar year
is expected to be $20,000 or more, the employer shall pay
the tax on the Wednesday after payday if the payday falls
on a Wednesday, Thursday or Friday and on the Friday
after payday if the payday falls on a Saturday, Sunday,
Monday or Tuesday.
(2) (i) If an employer fails to deduct, truthfully
account for or pay the tax withheld or file returns as
prescribed by this chapter, the department may serve a
notice on the employer requiring the employer to:
(A) withhold taxes which are required to be
deducted under section 2502(a);
(B) deposit the taxes in a bank approved by the
department in a separate account in trust for and
payable to the department; and
(C) keep the amount of the tax in the account
until payment is made to the department.
(ii) The notice under subparagraph (i) shall remain
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in effect until the department serves a notice of
cancellation on the employer.
(b) Frequency of remittance.--A person deducting and
withholding tax under section 2502(b) shall remit the tax to the
department on the same frequency that the person is required to
remit Federal income tax withheld from nonpayroll payments.
§ 2510. Payment of taxes withheld for nonemployer payors.
A payor withholding tax under section 2503 (relating to
withholding tax requirement for nonemployer payors) shall pay
over to the department or a depository designated by the
department the tax required to be deducted and withheld under
section 2503. The time for paying over the withheld tax shall be
as specified in section 2509(a)(1)(i), (ii), (iii) and (iv)
(relating to payment of taxes withheld).
§ 2511. Liability for withheld taxes.
(a) Liability.--A person required to deduct and withhold tax
under section 2502 (relating to requirement of withholding tax)
is liable for the tax.
(b) Enforcement.--
(1) For purposes of assessment and collection, an amount
required to be withheld and paid to the department and
additions to tax penalties and interest shall be considered
the tax of the person.
(2) Taxes deducted and withheld under section 2502 or
under color of section 2502 shall constitute a trust fund for
the Commonwealth and shall be enforceable against the person,
the person's representative or any other person receiving a
part of the fund.
§ 2512. Payor's liability for withheld taxes.
(a) Liability.--A payor required to deduct and withhold tax
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under section 2503 (relating to withholding tax requirement for
nonemployer payors) is liable for the tax.
(b) Enforcement.--
(1) For purposes of assessment and collection, an amount
required to be withheld and paid to the department and
additions to tax, penalties and interest shall be considered
the tax of the payor.
(2) Taxes deducted and withheld from payees under
section 2503 or under color of section 2503 shall constitute
a trust fund for the Commonwealth and shall be enforceable
against the payor, the payor's representative or any other
person receiving a part of the fund.
§ 2513. Failure to withhold.
If a person fails to deduct and withhold tax as prescribed in
this subchapter but subsequently pays the tax, the tax which was
required to be deducted and withheld shall not be collected from
the person, but the person shall be liable for penalties,
interest or additions imposed for failure to deduct and withhold
the tax.
§ 2514. Bulk and auction sales and transfers and notice.
An employer liable for filing returns in accordance with this
subpart who sells, causes to be sold at auction or sells or
transfers in bulk 51% or more of the employer's stock of goods,
wares, merchandise, fixtures, machinery, equipment, buildings or
real estate held by or on behalf of the employer shall be
subject to section 1403 of the Fiscal Code.
§ 2515. Payor's failure to withhold.
If a payor fails to deduct and withhold tax as prescribed
under section 2503 (relating to withholding tax requirement for
nonemployer payors) but subsequently pays the tax, the tax which
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was required to be deducted and withheld shall not be collected
from the payor, but the payor shall be liable for penalties,
interest or additions imposed for failure to deduct and
withhold.
§ 2516. Designation of third parties to perform acts required
of employers.
If a fiduciary, agent or other person has the control,
receipt, custody or disposal of or pays the compensation of an
employee or a group of employees employed by one or more
employers, the department may designate the fiduciary, agent or
other person to perform acts required of employers under this
subpart as the department may by regulation prescribe. Except as
otherwise prescribed by the department, all provisions of this
subpart which are applicable to an employer shall be applicable
to a fiduciary, agent or other person.
§ 2517. When withholding not required.
On and after January 1, 1975, an employer shall not be
required to withhold tax upon payment of wages to an employee if
the employee can certify that the employee:
(1) incurred no personal income tax liability for the
preceding tax year; and
(2) anticipates no liability for personal income tax for
the current taxable year.
SUBCHAPTER B
WITHHOLDING TAX ON INCOME FROM SOURCES
WITHIN COMMONWEALTH
Sec.
2521. General rule.
2522. Amount of withholding tax.
2523. Treatment of nonresident partners, members or
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shareholders.
2524. Liability for tax, interest, penalties and additions.
2525. Withholding on income.
2526. Annual withholding statement.
§ 2521. General rule.
(a) Time for payment.--
(1) If a partnership, estate, trust or Pennsylvania S
corporation receives income from sources within this
Commonwealth for a taxable year and a portion of the income
is allocable to a nonresident partner, beneficiary, member or
shareholder of the partnership, estate, trust or Pennsylvania
S corporation, the partnership, estate, trust or Pennsylvania
S corporation shall pay a withholding tax under this section
at the time and in the manner prescribed by the department.
(2) Notwithstanding any other provision of this subpart,
all withholding tax shall be paid on or before the 15th day
of the fourth month following the end of the taxable year.
(b) Applicability.--This section shall not apply to a
publicly traded partnership as defined under section 7704 of the
Internal Revenue Code of 1986 with equity securities registered
with the Securities and Exchange Commission under 15 U.S.C. §
781 (relating to registration requirements for securities).
§ 2522. Amount of withholding tax.
(a) Calculation.--The amount of tax withheld from
nonresidents and the amount of withholding tax payable under
section 2521 (relating to general rule) shall be equal to the
income from sources within this Commonwealth of the partnership,
association or Pennsylvania S corporation which is allocable to
nonresident partners, members or shareholders multiplied by the
tax rate specified in section 2201(b) (relating to imposition of
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tax).
(b) Income, gain, loss or deduction.--There shall not be
taken into account items of income, gain, loss or deduction to
the extent allocable to a partner, member or shareholder who is
not a nonresident.
(c) Share of income.--There shall not be taken into account
a share of income of a nonresident partner, member or
shareholder from sources within this Commonwealth to the extent
that the amount was subject to withholding under section 2526
(relating to annual withholding statement) and to the extent
withholding actually occurred under section 2525 (relating to
withholding on income) by the time withholding is required to be
made by the partnership, association or Pennsylvania S
corporation under section 2521.
§ 2523. Treatment of nonresident partners, members or
shareholders.
(a) Credit for partner, member, shareholder or holder of
beneficial interest.--
(1) A nonresident partner, member, shareholder or holder
of a beneficial interest shall be allowed a credit for the
partner's, member's, shareholder's or holder of a beneficial
interest's share of the withholding tax paid by the
partnership, association or Pennsylvania S corporation.
(2) The credit shall be allowed for the partner's,
member's, shareholder's or holder of a beneficial interest's
taxable year in which the partnership's, association's or
Pennsylvania S corporation's taxable year for which the tax
was paid ends.
(b) Nonresident lessor credit.--
(1) A nonresident lessor shall be allowed a credit for
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the nonresident lessor's share of the withholding tax paid by
the lessee under section 2525 (relating to withholding on
income).
(2) The credit under this subsection shall be allowed
for the nonresident lessor's taxable year in which the lessee
withheld tax.
§ 2524. Liability for tax, interest, penalties and additions.
If a partnership, association or Pennsylvania S corporation
fails to pay withholding tax as prescribed in this subchapter
but subsequently pays the tax, the partnership, association or
Pennsylvania S corporation shall be liable for penalties,
interest or additions imposed for failure to properly withhold
the tax.
§ 2525. Withholding on income.
(a) Income tax on lease payments.--A lessee of real estate
in this Commonwealth who makes a lease payment in the course of
a trade or business to a nonresident lessor shall withhold
Pennsylvania personal income tax on lease payments to the
nonresident lessor.
(b) Amount of tax.--A lessee shall withhold from each
payment made to a lessor an amount equal to the net amount
payable to the lessor multiplied by the tax rate specified under
section 2201(b) (relating to imposition of tax).
(c) Optional withholding.--The withholding of tax under this
section is optional and at the discretion of the lessee if the
lessee pays the lessor less than $5,000 annually on a lease.
(d) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"In the course of a trade or business." Includes a person,
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other than a tenant of residential property, making lease
payments to a nonresident or agent of a nonresident who collects
rent or lease payments on behalf of a nonresident owner.
"Lease payment." The following shall apply:
(1) The term includes rents, royalties, bonus payments,
damage payments, delay rents and other payments made under a
lease, other than compensation derived from intangible
property having a taxable or business situs in this
Commonwealth.
(2) Classification as a "lease payment" under this
section is solely for the purposes of establishing
withholding requirements and is not relevant for a
determination as to the proper income classification of a
lease payment.
"Lessor." Includes an individual, estate or trust.
§ 2526. Annual withholding statement.
(a) Annual statement to lessor.--A lessee shall furnish to a
lessor an annual statement at the time and in the manner
prescribed by the department showing the total payments made by
the lessee to the lessor during the preceding taxable year and
showing the amount of the tax deducted and withheld from the
payments under section 2525 (relating to withholding on income).
(b) Annual statement to department.--A lessee shall file
with the department an annual statement at the time and in the
manner prescribed by the department showing the total payments
made to each lessor subject to withholding during the preceding
taxable year or any portion of the preceding taxable year and
the total amount of tax deducted and withheld under section
2525.
(c) Duplicate.--A lessor shall file a duplicate of the
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annual statement furnished by the lessee under this section with
the lessor's State income tax return.
CHAPTER 26
ESTIMATED TAX
Sec.
2601. Definitions.
2602. Declarations of estimated tax.
2603. Payments of estimated tax.
§ 2601. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Estimated tax." The amount that an individual, trust or
estate estimates to be the tax due under this subpart for the
taxable year, less the amount estimated to be the sum of credits
allowable against the tax under this subpart.
§ 2602. Declarations of estimated tax.
(a) Declaration.--A resident or nonresident individual,
trust or estate shall, at the time specified under this section,
make a declaration of the estimated tax for the taxable year
containing information as the department may prescribe by
regulation, if the individual's, trust's or estate's income,
other than from income on which tax is withheld under this
subchapter, is expected to exceed $8,000.
(b) Joint declaration.--
(1) Spouses may make a joint declaration of estimated
tax under this section as if they were one taxpayer, in which
case the liability with respect to the estimated tax shall be
joint and several.
(2) If a joint declaration is made but the spouses elect
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to determine each spouse's taxes separately, the spouses may
choose to treat the estimated tax for the year as the
estimated tax of either spouse or to divide the estimated tax
between them.
(c) Date for filing.--Except as otherwise provided in this
section, the date for filing a declaration of estimated tax
shall depend upon when the resident or nonresident individual,
trust or estate determines that the income on which no tax has
been withheld under this subchapter is expected to exceed $8,000
in the taxable year. The following shall apply:
(1) If the determination is made on or before April 1 of
the taxable year, a declaration of estimated tax shall be
filed no later than April 15 of the taxable year.
(2) If the determination is made after April 1 but
before June 2 of the taxable year, the declaration shall be
filed no later than June 15 of the taxable year.
(3) If the determination is made after June 1 but before
September 2 of the taxable year, the declaration shall be
filed no later than September 15 of the taxable year.
(4) If the determination is made after September 1 of
the taxable year, the declaration shall be filed no later
than January 15 of the year succeeding the taxable year.
(d) Income from farming.--
(1) Notwithstanding subsection (c), a declaration of
estimated tax of an individual having an estimated gross
income from farming for the taxable year which is at least
two-thirds of the individual's total estimated gross income
for the taxable year may be filed at any time on or before
January 15 of the succeeding year.
(2) If a farmer files a final return and pays the entire
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tax by March 1, the return may be considered the declaration
due on or before January 15.
(e) Estimated tax less than $100.--A declaration of
estimated tax of an individual, trust or estate having a total
estimated tax for the taxable year of $100 or less may be filed
at any time on or before January 15 of the succeeding year under
regulations of the department.
(f) Amendment of declaration.--An individual, trust or
estate may amend a declaration under regulations of the
department.
(g) Filing and paying for full year.--If, on or before
January 31 of the year succeeding a taxable year, an individual,
trust or estate files a return for the entire taxable year for
which a declaration was required to be filed within the time
prescribed under subsection (c)(4) and pays the full amount of
the tax due on the return:
(1) The return shall be considered the declaration which
was required to be filed no later than January 15.
(2) The return shall be considered as the amendment
permitted under subsection (f) to be filed on or before
January 15, if the amount of tax shown on the return is
greater than the amount of estimated tax shown in a
declaration previously made.
(h) Noncalendar taxable year.--This subpart shall apply to a
taxable year other than a calendar year by the substitution of
the months of the fiscal year for the corresponding months
specified in this section.
(i) Short taxable year.--This subpart shall apply to an
individual, trust or estate having a taxable year of less than
12 months in accordance with regulations of the department.
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§ 2603. Payments of estimated tax.
(a) Payments generally.--Subject to the provisions of
section 2602(i) (relating to declarations of estimated tax), the
estimated tax with respect to which a declaration is required
shall be paid as follows:
(1) If the declaration is filed on or before April 15 of
the taxable year, the estimated tax shall be paid in four
equal installments as follows:
(i) The first installment shall be paid at the time
the declaration is filed.
(ii) The second installment shall be paid on or
before the succeeding June 15.
(iii) The third installment shall be paid on or
before the succeeding September 15.
(iv) The fourth installment shall be paid on or
before the succeeding January 15.
(2) If the declaration is not required to be filed on or
before April 15 of the taxable year and is filed after April
15 but before June 16 of the taxable year, the estimated tax
shall be paid in three equal installments as follows:
(i) The first installment shall be paid at the time
the declaration is filed.
(ii) The second installment shall be paid on the
succeeding September 15.
(iii) The third installment shall be paid on the
succeeding January 15.
(3) If the declaration is not required to be filed on or
before June 15 of the taxable year and is filed after June 15
but before September 16 of the taxable year, the estimated
tax shall be paid in two equal installments as follows:
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(i) The first installment shall be paid at the time
the declaration is filed.
(ii) The second installment shall be paid on the
succeeding January 15.
(4) If the declaration is not required to be filed on or
before September 15 of the taxable year and is filed after
September 15 of the taxable year, the estimated tax shall be
paid in full at the time the declaration is filed.
(5) If the declaration is not filed within the time
prescribed in this section or after the expiration of an
extension of time, paragraphs (2), (3) and (4) shall not
apply, and all installments of estimated tax which were due
and payable on or before the date the declaration was filed
shall be paid at the time the declaration is filed. Remaining
installments shall be paid at the times and in the amounts as
if the declaration had been filed when due.
(b) Farming.--If an individual described in section 2602(d)
(relating to declarations of estimated tax) makes a declaration
of estimated tax after September 15 of the taxable year but
before the following March 1, the estimated tax shall be paid in
full at the time of the filing of the declaration.
(c) Amendment of declaration.--
(1) If an amendment of a declaration is filed, the
remaining unpaid installments, if any, shall be ratably
increased or decreased to reflect an increase or decrease in
the estimated tax by reason of the amendment.
(2) If an amendment is made after September 15 of the
taxable year, an increase in the estimated tax by reason of
the amendment shall be paid at the time the amendment is
made.
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CHAPTER 27
RETURNS AND PAYMENT OF TAX
Sec.
2701. Returns and liability.
2702. Return of Pennsylvania S corporation.
2703. Returns of married, deceased or disabled individuals and
fiduciaries.
2704. Time and place for filing returns and paying tax.
2704.1. Electronic payment.
2705. Signing of returns and other documents.
2706. Extension of time.
2707. Requirements concerning returns, notices, records and
statements.
2708. Timely mailing treated as timely filing and payment.
2709. Procedure for claiming special tax provisions.
2710. Proof of eligibility.
2711. Paid tax return preparers and required information on
personal income tax returns.
§ 2701. Returns and liability.
(a) Tax return.--On or before the date when the taxpayer's
Federal income tax return is due or would be due if the taxpayer
were required to file a Federal income tax return under the
Internal Revenue Code of 1954, a tax return under this subpart
shall be made and filed by or for every taxpayer having income
for the taxable year.
(b) Special provisions for members of armed forces.--
(1) This subsection shall apply to an individual:
(i) serving in the armed forces of the United States
in an area designated by the President of the United
States by Executive order as a "combat zone" as described
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in section 7508 of the Internal Revenue Code of 1986, as
amended, at any time during a period designated by the
President by Executive order as the period of combatant
activities in the combat zone;
(ii) hospitalized within or outside the United
States as a result of injury received while serving in
the combat zone during that time specified in
subparagraph (i); or
(iii) serving in a military capacity as a result of
a Federal callup to active duty or civilian capacity
outside this Commonwealth in support of the armed forces.
(2) The period of service in the area specified in
paragraph (1), plus the period of hospitalization within or
outside the United States attributable to injury, and the
next 180 days shall be disregarded, with respect to tax
liability under this subpart, including interest, penalty,
additional amount or addition to the tax of the individual,
in determining any of the following:
(i) Whether any of the following acts were performed
within the time prescribed in this paragraph:
(A) Filing a return of income tax, except income
tax withheld at source.
(B) Payment of income tax, except income tax
withheld at source, an installment of income tax
withheld at source or any other tax liability to the
Commonwealth.
(C) Filing a petition for redetermination of a
deficiency or review of a decision rendered by the
department.
(D) Allowance of a credit or refund of a tax.
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(E) Filing a claim for credit or refund of a
tax.
(F) Bringing suit upon a claim for credit.
(G) Assessment of a tax.
(H) Giving or making a notice or demand for the
payment of a tax or a tax liability to the
Commonwealth.
(I) Collection by the department of a tax
liability.
(J) Bringing suit by the Commonwealth, or any
officer on its behalf, in respect of any liability in
respect of any tax.
(K) Any other act required or permitted under
this subpart specified in regulations prescribed by
the department.
(ii) The amount of a credit or refund, including
interest.
(3) This subsection shall apply to the spouse of an
individual entitled to the benefits under this subsection.
This paragraph shall not cause this subsection to apply for a
spouse for a taxable year beginning more than one year after
the date of termination of combatant activities in a combat
zone.
(4) The period of service in the area referred to in
this subsection shall include the period during which an
individual entitled to benefits under this subsection is in a
missing status.
(5) If a qualified individual under paragraph (1) is
killed while serving in a combat zone, the tax liability of
the decedent for the year of death and the immediately prior
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year shall be waived by the Commonwealth.
§ 2702. Return of Pennsylvania S corporation.
(a) Annual return.--Each Pennsylvania S corporation shall
make a return for each taxable year stating all of the
following:
(1) All items of gross income and deductions.
(2) The names and addresses of all persons owning stock
in the corporation at any time during the taxable year.
(3) The number of shares of stock owned by each
shareholder at all times during the taxable year.
(4) The amount of money and other property distributed
by the corporation during the taxable year to each
shareholder.
(5) The date of each distribution.
(6) Each shareholder's pro rata share of each item of
the corporation for the taxable year.
(7) Other information as the department may require.
(b) Time for filing.--The return shall be filed on or before
30 days after the date the corporation's Federal income tax
return is due.
(c) Copy of income tax return required.--Each Pennsylvania S
corporation shall also submit to the department a true copy of
the income tax return filed with the Federal Government at the
time the return required under subsection (a) is filed.
(d) Statement to shareholders.--Each Pennsylvania S
corporation required to file a return under subsection (a) for a
taxable year shall, on or before the day on which the return for
the taxable year was filed, furnish to each person who is a
shareholder at any time during the taxable year a written
statement of the shareholder's pro rata share of each item on
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the corporate return on a form required by the department.
§ 2703. Returns of married, deceased or disabled individuals
and fiduciaries.
(a) Separate liabilities.--If the income tax liability of a
spouse is determined on a separate return, each spouse's tax
liabilities under this subpart shall be separate.
(b) Joint liabilities.--If the income tax liabilities of
each spouse are determined on a joint return, the spouses' tax
liabilities under this subpart shall be joint and several.
(c) Nonresident spouse.--
(1) Subject to paragraph (2), if either spouse is a
resident and the other is a nonresident, the spouses shall
file separate returns under this subpart on a single form or
separate forms as required by the department, in which event
the spouses' tax liabilities under this subpart shall be
separate, except as provided in subsection (d).
(2) Notwithstanding paragraph (1), spouses may determine
their joint taxable income as if both were residents, in
which event the spouses' tax liabilities under this subpart
shall be joint and several.
(d) Excess credited to spouse.--
(1) Subject to paragraph (2), if spouses file separate
tax returns under this subpart on a single form under
subsection (a) or (c), the following shall apply:
(i) If the sum of the payments by either spouse,
including withheld and estimated taxes, exceeds the
amount of the tax for which the spouse is separately
liable, the excess may be applied by the department to
the credit of the other spouse if the sum of the payments
by the other spouse, including withheld and estimated
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taxes, is less than the amount of the tax for which the
other spouse is separately liable.
(ii) If the sum of the payments made by both spouses
with respect to the taxes for which the spouses are
separately liable, including withheld and estimated
taxes, exceeds the total of the taxes due, a refund of
the excess may be made payable to both spouses or, if
either is deceased, to the survivor spouse.
(2) Paragraph (1) shall not apply if the return of
either spouse includes a demand that an overpayment made by
either spouse shall be applied only on account of the
separate liability.
(e) Return of deceased individual.--Except as provided under
subsections (f) and (g), the final return for a deceased
individual shall be made, signed and filed by the executor,
administrator or other personal representative charged with the
deceased individual's property.
(f) Return of surviving spouse.--
(1) (i) During the year in which a spouse dies, a
surviving spouse may file a return for the year jointly
with the final return of the deceased spouse if the joint
return could have been filed if both spouses were living
for the entire taxable year.
(ii) If a personal representative, executor,
administrator or other fiduciary is appointed on behalf
of the deceased spouse before the deceased spouse's tax
return is filed, the surviving spouse may not file a
joint return without the consent of the fiduciary.
(iii) If a joint return is filed, both the fiduciary
of the deceased spouse's estate and the surviving spouse
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must sign the joint return.
(2) (i) A surviving spouse may make, sign and file the
final tax return of the deceased spouse if the deceased
spouse did not previously file a return for that taxable
year and if a personal representative, executor or
administrator has not been appointed by the time the
return is made, signed and filed.
(ii) If the surviving spouse properly files a final
return for the deceased spouse under this paragraph, a
fiduciary who is later appointed for the deceased spouse
may supersede the final return filed by the surviving
spouse by filing a separate return for the deceased
spouse.
(iii) A joint return improperly filed by the
surviving spouse or superseded by the fiduciary shall be
treated as void.
(iv) If the surviving spouse files a return jointly
with the deceased spouse's return under this paragraph
and the return is superseded by the filing of a return by
the deceased spouse's fiduciary, the surviving spouse
shall be required to file a separate return within 90
days of the filing of the fiduciary's return.
(v) The surviving spouse's separate return shall be
deemed to be filed on:
(A) the day the joint return was filed if the
joint return is filed on time; or
(B) the date the department receives it.
(g) Joint return for deceased spouses.--
(1) If both taxpayers die during the same tax year, a
final return for each deceased spouse may be jointly filed if
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a joint return could have been filed had both spouses lived
for the entire taxable year and with the consent of the
personal representatives, executors or administrators of both
deceased spouses under subsection (f) by the due date,
including extensions, of the joint tax return.
(2) Both fiduciaries must sign the joint return under
paragraph (1).
(h) Individual unable to complete return.--The return for an
individual who is unable to make a return by reason of age or
disability shall be made and filed by a guardian, committee,
fiduciary or other person charged with the care of the
individual and the individual's property or by a duly authorized
agent.
(i) Estates and trusts.--The return for an estate or trust
shall be made and filed by the fiduciary. If two or more
fiduciaries are acting jointly, the return may be made by any
one of them. If the executor of the estate and trustee of the
trust make an election under section 645 of the Internal Revenue
Code of 1986, as amended, to treat the income of the trust as
part of the estate, the fiduciary may make and file a joint tax
return for the estate and trust under this subsection for the
taxable years when the trust income is reported as part of the
estate income in accordance with section 645 of the Internal
Revenue Code of 1986, as amended. If the income tax liabilities
of the estate and trust are filed on a joint tax return under
this subsection, the tax liabilities of the estate and trust
shall be joint and several. The provisions of subsection (d)
shall be applicable to a joint tax return filed under this
subsection.
§ 2704. Time and place for filing returns and paying tax.
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(a) Payment.--A person required to make and file a return
under this subpart shall, without assessment, notice or demand,
pay a tax due to the department on or before the date fixed for
filing the return, as determined without regard to an extension
of time for filing the return.
(b) Place and documents for filing.--The department shall
prescribe by regulation the following:
(1) The place for filing a return.
(2) Forms for returns, declarations, statements or other
documents required under this subpart.
(3) Payment of a tax.
§ 2704.1. Electronic payment.
A payment in the amount of $15,000 or more remitted to the
department for the tax imposed under this subpart shall be
remitted electronically as prescribed by the department. This
section shall not apply to employer withholding payments under
Chapter 25 (relating to withholding of tax) and section 9 of the
Fiscal Code.
§ 2705. Signing of returns and other documents.
(a) Return to be signed.--A return other than an estimated
return under section 2602 (relating to declarations of estimated
tax), statement or other document required to be made under this
subpart shall be signed in accordance with regulations or
instructions prescribed by the department.
(b) Partnerships.--A return, statement or other document
required of a partnership shall be signed by one or more
partners. The fact that a partner's name is signed to a return,
statement or other document shall be prima facie evidence for
all purposes that the partner is authorized to sign on behalf of
the partnership.
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(c) Certification of return, declaration, statement or other
document.--The making or filing of a return, declaration,
statement or other document or copy of a return, declaration,
statement or other document required to be made or filed under
this subpart shall constitute a certification by the person
making or filing the return, declaration, statement or other
document or copy of a return, declaration, statement or other
document that the statements contained in the return,
declaration, statement or other document are true and that a
copy filed is a true copy.
§ 2706. Extension of time.
(a) Authorization.--The department may, upon application,
grant a reasonable extension of time for filing a return,
declaration, statement, or other document required under this
subpart on terms and conditions as the department may require.
(b) Limitation.--Except for a taxpayer who is outside the
United States, an extension for filing a return, declaration,
statement or other document shall not exceed six months.
§ 2707. Requirements concerning returns, notices, records and
statements.
(a) Regulations.--
(1) The department may prescribe by regulation for the
following:
(i) The keeping of records.
(ii) The content and form of returns, declarations,
statements and other documents.
(iii) The filing of copies of Federal income tax
returns and determinations.
(2) The department may require a person, by regulation
or notice served upon the person, to make returns, render
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statements or keep records as the department deems sufficient
to show whether or not the person is liable for tax under
this subpart.
(b) Identifying information.--
(1) When required by regulation prescribed by the
department:
(i) A person required under this subpart to make a
return, declaration, statement or other document shall
include in the return, declaration, statement or other
document an identifying number as may be prescribed for
securing proper identification of the person.
(ii) A person with respect to whom a return,
declaration, statement or other document is required
under this subpart to make a return, declaration,
statement or other document with respect to another
person shall request from the other person, and shall
include in a return, declaration, statement or other
document, an identifying number as may be prescribed for
securing proper identification of the other person.
(2) For purposes of this section, the department may
require information necessary to assign an identifying number
to a person.
(c) Partnerships, estates and trusts.--
(1) (i) Each partnership, estate or trust having a
resident partner or resident beneficiary or each
partnership, estate or trust having income derived from
sources within this Commonwealth shall make a return for
the taxable year setting forth all items of income, loss
and deduction and other pertinent information as the
department may require.
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(ii) The return shall be filed on or before the 15th
day of the fourth month following the close of each
taxable year.
(iii) For purposes of this subsection, "taxable
year" means the year or period which would be a taxable
year of the partnership if the partnership is subject to
tax under this subpart.
(2) Each partnership, estate or trust required to file a
return under paragraph (1) shall also file with the
department a true copy of the income tax return filed with
the Federal Government at the time the return required under
paragraph (1) is filed.
(3) Each partnership, estate or trust required to file a
return under paragraph (1) for any taxable year shall, on or
before the day the return is filed, furnish to each partner
or nominee for another person or to each beneficiary to whom
the income or gains of the estate or trust is taxable a
written statement of the partner's pro rata share of each
item on the partnership return or the beneficiary's pro rata
share of income on the estate or trust return in a form
required by the department.
(4) (i) A partnership required to file a return under
paragraph (1) for a taxable year shall, on or before the
day the return is filed, furnish to each partner
classified as a corporation, partnership or disregarded
entity for Federal income tax purposes a copy of the
Pennsylvania income tax form reporting corporate partner
apportioned business income or loss.
(ii) A reporting partnership shall not be required
to provide a partner who is either a partnership or
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disregarded entity a copy of the form if the reporting
partnership is able to determine that an entity
classified as a corporation for Federal income tax
purposes is not an indirect owner of the reporting
partnership.
(d) Returns of information.--
(1) The department may prescribe regulations requiring
returns of information to be made and filed on or before
February 28 of each year as to the payment or credit in any
calendar year of amounts of $10 or more to a taxpayer.
(2) Returns may be required of:
(i) A person, including a lessee or mortgagor of
real or personal property, a fiduciary and an employer.
(ii) All officers and employees of this
Commonwealth.
(iii) A municipal corporation or political
subdivision of this Commonwealth having the control,
receipt, custody, disposal or payment of interest, rents,
salaries, wages, premiums, annuities, compensations,
remunerations, emoluments or other fixed or determinable
gains, profits or income, except interest coupons payable
to bearer.
(3) A duplicate of the statement of tax withheld on
compensation required to be furnished by an employer to an
employee shall constitute the return of information required
to be made under this section with respect to compensation.
(e) Gambling and lottery winnings.--A person who is required
to make a form W-2G return to the United States Secretary of the
Treasury in regard to taxable gambling or lottery winnings from
sources within this Commonwealth shall file a copy of the form
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with the department by March 1 of each year or, if filed
electronically, by March 31 of each year.
(f) Form 1099-MISC.--
(1) A person shall file a copy of form 1099-MISC with
the department and send a copy of the form to a payee by
March 1 of each year or, if filed electronically, by March 31
of each year if the person:
(i) makes payments of Pennsylvania source income
that fall within any of the classes of income enumerated
in section 2203(a) (relating to classes of income);
(ii) makes payments to an individual, an entity
treated as a partnership for tax purposes or a single
member limited liability company; and
(iii) is required to make a form 1099-MISC or 1099-
NEC return to the United States Secretary of the Treasury
with respect to the payments.
(2) If the form 1099-MISC or 1099-NEC filed by a payor
with the United States Secretary of the Treasury does not
include the State income and State tax withheld as required
under section 2503 (relating to withholding tax requirement
for nonemployer payors), the payor shall update the copies of
form 1099-MISC or 1099-NEC to be provided under this section
to reflect the information prior to filing the form 1099-MISC
with the department and sending the form 1099-MISC to the
payee.
(3) If the payor is required to perform electronic
filing for Pennsylvania employer withholding purposes, the
form 1099-MISC or 1099-NEC shall be filed electronically with
the department.
(4) As used in this subsection, the following words and
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phrases shall have the meanings given to them in this
paragraph unless the context clearly indicates otherwise:
"Payee." The person receiving the payments subject to
withholding under this subsection.
"Payments." The term does not include a partner or
shareholder's distributive share of income from a partnership
or Pennsylvania S corporation.
"Payor." The person required to withhold under this
subsection.
(g) List of partners, members, beneficiaries or
shareholders.--
(1) (i) Each estate, trust, Pennsylvania S corporation
or partnership, other than a publicly traded partnership,
shall maintain at the end of the entity's taxable year an
accurate list of partners, members, beneficiaries and
shareholders.
(ii) The list shall include the name, current
address and tax identification number of all existing
partners, members, beneficiaries and shareholders and of
all partners, members, beneficiaries and shareholders who
were admitted or who withdrew during the taxable year,
including the date of admittance or withdrawal.
(2) If the entity under paragraph (1) does not maintain
an accurate list as required, the tax, penalty and interest
with respect to the entity shall be considered the tax,
penalty and interest of the partnership, estate, trust or
Pennsylvania S corporation and of the general partner, tax
matters partner, corporate officer or trustee.
§ 2708. Timely mailing treated as timely filing and payment.
(a) Timely mailing.--Notwithstanding the provisions of any
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State tax law, when a report or payment of all or a portion of a
State tax is required by law to be received by the department or
other agency of the Commonwealth on or before a day certain, the
taxpayer shall be deemed to have complied with the law if the
letter transmitting the report or payment of the tax received by
the department is postmarked by the United States Postal Service
on or prior to the final day on which the payment is due.
(b) Receipt as evidence.--For the purposes of this subpart,
presentation of a receipt indicating that the report or payment
was mailed by registered or certified mail on or before the due
date shall be evidence of timely filing and payment.
§ 2709. Procedure for claiming special tax provisions.
The following procedures shall be employed for claiming
special tax provisions:
(1) A claimant may claim the special tax provisions upon
the expiration of the taxable year in which the claimant
filed an annual return under this subpart. Notwithstanding
any other provisions of this subpart, the department shall
promulgate rules or regulations as it deems necessary to
implement the provisions of this section.
(2) If a claimant receives income as defined in this
subpart, other than compensation from an employer, the
claimant may claim the special tax provisions in connection
with the filing of estimated tax returns.
§ 2710. Proof of eligibility.
(a) Establishment of eligibility procedures.--The department
shall establish rules, regulations, schedules and other
procedures necessary for the submission and establishment of
proof of eligibility of persons for special tax provisions or
other matters relating to the provisions of this subpart.
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(b) Procedures.--Procedures may include the submission of
requisite information and certifications upon forms provided by
the department, including special tax return or report forms as
necessary.
§ 2711. Paid tax return preparers and required information on
personal income tax returns.
(a) Signature and tax identification number.--For taxable
years beginning on or after January 1, 2020, a personal income
tax return prepared by a paid tax return preparer shall be
signed by the paid tax return preparer and shall bear the paid
tax return preparer's Internal Revenue Service preparer tax
identification number.
(b) Administrative penalty.--
(1) The department may impose an administrative penalty
of $50 on a paid tax return preparer each time the paid tax
return preparer fails to sign the return or fails to provide
the preparer's tax identification number.
(2) The maximum amount imposed on any individual paid
tax return preparer under paragraph (1) shall not exceed
$25,000 per paid tax return preparer in a calendar year.
(c) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Paid tax return preparer." A person who prepares for
compensation, or employs one or more persons to prepare for
compensation, a personal income tax return required to be filed
under this title. Preparation of a substantial portion of a
personal income tax return shall be treated as if it were the
preparation of the personal income tax return.
CHAPTER 28
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PROCEDURE AND ADMINISTRATION
Sec.
2801. Payment on notice and demand.
2802. Assessment.
2803. Jeopardy assessments.
2804. Procedure for reassessment.
2805. Collection of tax.
2806. Collection upon failure to request reassessment, review
or appeal.
2807. Lien for tax.
2808. Refund or credit of overpayment.
2809. Restrictions on refunds.
2810. Limitations on assessment and collection.
2811. Extension of limitation period.
2812. Limitations on refund or credit.
2813. Interest.
2814. Additions, penalties and fees.
2815. Abatement of additions or penalties.
2816. Citation authority.
2817. Crimes.
2818. Rules and regulations.
2819. Examination.
2820. Cooperation with other governmental agencies.
2821. Appropriation for refunds.
§ 2801. Payment on notice and demand.
Upon receipt of notice and demand from the department, the
amount of a tax due under the provisions of this subpart stated
in the notice and demand shall be paid.
§ 2802. Assessment.
(a) Duty of department.--The department shall make the
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inquiries, determinations and assessments of all taxes imposed
by this subpart.
(b) Procedure or time for assessment.--If the procedure or
time for the assessment of a tax is not otherwise provided for,
the department may establish the procedure or time for the
assessment of a tax by regulations.
(c) Estimated assessment.--
(1) If a taxpayer fails to file a return required by
this subpart, the department may make an estimated assessment
of the proper amount of tax owed by the taxpayer based on
available information.
(2) A notice of assessment in the estimated amount shall
be sent to the taxpayer.
(3) The tax shall be paid within 90 days after a notice
of the estimated assessment has been mailed to the taxpayer,
unless the taxpayer has filed a petition for reassessment in
the manner prescribed by Article XXVII of the Tax Reform Code
of 1971 within the 90-day period.
(d) Notice.--A notice of assessment issued by the department
under this subpart shall be mailed to the taxpayer. The notice
shall specify the basis of the assessment.
§ 2803. Jeopardy assessments.
(a) Jeopardy assessments, filing and notice.--If the
department believes that the assessment or the collection of a
deficiency will be jeopardized in whole or in part by delay, the
department may mail or issue notice of the department's finding
to the taxpayer, together with a demand for immediate payment of
the tax or the deficiency declared to be in jeopardy, including
interest, penalties and additions.
(b) Closing of taxable year.--The department shall declare
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the taxable period for a taxpayer immediately terminated and
shall cause notice of the finding and declaration to be given to
a taxpayer, together with a demand for immediate payment of the
tax for the taxable period declared terminated and the tax for
the preceding taxable year or as much of the tax as is unpaid if
the department believes that a taxpayer is planning to do any of
the following:
(1) Leave this Commonwealth to escape tax collection
proceedings.
(2) Remove the taxpayer's property from this
Commonwealth to escape tax collection proceedings.
(3) Conceal the taxpayer or the taxpayer's property in
this Commonwealth to escape tax collection proceedings.
(4) Commit any other act which would prejudice or render
ineffectual proceedings to collect the tax for the current or
previous taxable year unless the proceedings are brought
without delay.
(c) Jeopardy assessments and collection.--
(1) A jeopardy assessment is immediately due and
payable, and proceedings for collection may be commenced
immediately after notice is issued to the taxpayer.
(2) (i) The taxpayer may stay collection and prevent
the jeopardy assessment from becoming final by filing,
within 10 days after the date of the notice of jeopardy
assessment, a petition for reassessment, notwithstanding
the provisions of section 2702 of the Tax Reform Code of
1971.
(ii) The petition shall be accompanied by a bond or
other security in an amount the department deems
necessary.
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(iii) The amount of the bond or security may not
exceed double the amount, including interest, penalties
and additions, of tax for which the stay is desired.
(d) Final jeopardy assessment.--If a petition for
reassessment, accompanied by bond or other security, is not
filed within the 10-day period, the assessment shall become
final.
(e) Hearing on jeopardy assessment.--If a taxpayer requests
a hearing on the petition for reassessment, the department shall
grant the taxpayer or the taxpayer's authorized representative
an oral hearing.
(f) Action on petition for reassessment.--
(1) The department shall consider the petition for
reassessment and notify the taxpayer of the department's
decision.
(2) The department's decision as to the validity of the
jeopardy assessment shall be final unless the taxpayer,
within 90 days after notification of the department's
decision, files a petition for review authorized under
section 2704 of the Tax Reform Code of 1971.
(g) Presumptive evidence of jeopardy.--
(1) In a proceeding brought to enforce payment of taxes
made due and payable under this section, the belief of the
department under subsection (a), whether made after notice to
the taxpayer or not, is presumptive evidence that the
assessment or collection of the tax or the deficiency was in
jeopardy.
(2) A certification by the department of the mailing or
issuing of the notices specified in this section is
presumptive evidence that the notices were mailed or issued.
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§ 2804. Procedure for reassessment.
A taxpayer against whom an assessment is made may petition
the department for a reassessment under Article XXVII of the Tax
Reform Code of 1971.
§ 2805. Collection of tax.
The department shall collect taxes imposed under this subpart
in the manner provided by law for the collection of taxes
imposed by the laws of this Commonwealth.
§ 2806. Collection upon failure to request reassessment, review
or appeal.
(a) Time frames.--The department may collect a tax:
(1) Ninety days after the date a copy of the notice of
assessment was mailed, if no petition for reassessment has
been filed.
(2) Ninety days after the date of mailing of the notice
of the department's action on the reassessment, if no
petition for review has been filed.
(3) Thirty days after the date of mailing of the notice
of the decision of the Board of Finance and Revenue upon a
petition for review or from the expiration of the board's
time for acting upon the petition, if no decision has been
made.
(4) Immediately, in all cases of judicial sales,
receiverships, assignments or bankruptcies.
(b) Administrative remedies to be exhausted.--In a
proceeding for the collection of the tax imposed under this
subpart, the person against whom the assessment was made shall
not be permitted to present a ground of defense that might have
been presented to the department, the Board of Finance and
Revenue or the Commonwealth Court if the person had properly
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pursued the administrative remedies under this subpart.
§ 2807. Lien for tax.
(a) Lien.--
(1) If a person liable to pay a tax neglects or refuses
to pay the tax on the date the tax becomes collectible, the
amount of the tax, together with costs which may accrue in
addition to the tax, shall be a lien in favor of the
Commonwealth against the real and personal property of the
person after the lien has been duly entered and docketed of
record by the prothonotary of the county where the property
is situated.
(2) A prothonotary may not require, as a condition
precedent to the entry of the lien, the payment of costs for
entry and docketing of the lien.
(b) Record and priority of lien.--
(1) The department may transmit to the prothonotaries of
the respective counties certified copies of all liens for
taxes imposed under this subpart.
(2) A prothonotary receiving a lien from the department
shall enter and docket the lien of record in the
prothonotary's office. Each lien shall be indexed in the same
manner as a judgment.
(3) A lien shall have priority to, and be fully paid
before, any other obligation, judgment, claim, lien or estate
paid and satisfied out of the judicial sale of real and
personal property with which the property may subsequently
become charged, or for which the property may subsequently
become liable, subject to mortgage or other liens existing
and duly recorded at the time the tax lien is recorded,
except the cost of sale, the writ upon which the sale is made
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and real estate taxes imposed or assessed upon the property.
(4) A writ of execution may directly issue upon the lien
without the issuance and prosecution to judgment of a writ of
scire facias if, not less than 10 days before issuance of an
execution on the lien, notice of the filing and effect of the
lien is sent by certified mail to the taxpayer at the
taxpayer's last known mailing address.
(5) The lien shall have no effect upon a stock of goods,
wares or merchandise regularly sold or leased in the ordinary
course of business by the person against whom the lien has
been entered, unless a writ of execution has been issued and
a levy made upon the stock of goods, wares and merchandise.
(c) Violation and penalties.--A prothonotary who willfully
fails to carry out a duty imposed upon the prothonotary by this
section commits a misdemeanor and shall, upon conviction, be
sentenced to pay a fine not exceeding $1,000 and costs of
prosecution or to imprisonment for not more than one year, or
both.
§ 2808. Refund or credit of overpayment.
(a) Overpayment.--In the case of a payment of tax not due
under this subpart, the department may credit the amount of the
overpayment against any liability of the tax imposed by this
subpart to the person who made the overpayment and shall refund
any balance to the person.
(b) Credit regulations.--The department shall prescribe
regulations providing for the crediting against the estimated
tax for a taxable year of the amount determined to be an
overpayment of the tax for a preceding taxable year.
(c) Overpayment of installment.--If a taxpayer has paid as
an installment of estimated tax more than the correct amount of
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the installment, the overpayment shall be credited against the
unpaid installments, if any. If the amount paid, whether or not
on the basis of installments, exceeds the amount determined to
be the correct amount of the tax, the overpayment shall be
credited or refunded as provided in subsection (a) or (b).
§ 2809. Restrictions on refunds.
A credit or refund may be made under section 2808 (relating
to refund or credit of overpayment):
(1) By reason of the overpayment of an installment of
estimated tax.
(2) Upon reassessment.
(3) Upon the filing of a final return or amended final
return showing an overpayment of tax.
§ 2810. Limitations on assessment and collection.
(a) Time period for assessment.--The amount of a tax imposed
by this subpart shall be assessed within three years after the
return is filed. For the purposes of this subsection and
subsection (b), a return filed before the last day prescribed
for the filing of the return, or before the last day of an
extension of time for the filing of the return, shall be
considered filed on the last day.
(b) Incorrect income filed.--If a taxpayer omits from income
an amount includable in the person's income in excess of 25% of
the amount of income stated in the return, the tax may be
assessed at any time within six years after the return was
filed.
(c) No return or amended return filed.--If no return is
filed, or if a taxpayer fails to file an amended return when
required, the amount of the tax due may be assessed at any time.
(d) False or fraudulent return.--If a taxpayer files a false
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or fraudulent return with intent to evade the tax imposed by
this subpart, the amount of tax due may be assessed at any time.
(e) Assessment for erroneous credit or refund.--The
department may file an assessment to recover a refund, part of a
refund, credit or part of a credit which was erroneously made or
allowed within three years of the granting of the refund or
credit or within the period in which an assessment or
reassessment could have been filed by the department with
respect to the taxable period for which the refund was granted,
whichever period occurs later.
§ 2811. Extension of limitation period.
(a) Consent for extension.--Notwithstanding section 2810
(relating to limitations on assessment and collection), if a
taxpayer consents in writing to an extension of the time period
for assessment, the amount of tax due may be assessed at any
time within the extended period.
(b) Further extensions.--The extension period may be further
extended by subsequent consents in writing made before the
expiration of the extended period.
§ 2812. Limitations on refund or credit.
An application for refund must be filed with the department
under Article XXVII of the Tax Reform Code of 1971 within the
time limits of section 3003.1 of the Tax Reform Code of 1971.
§ 2813. Interest.
(a) Applicability.--This section shall not apply to a
failure to pay estimated tax.
(b) Interest generally.--
(1) If an amount of tax imposed by Subchapter A of
Chapter 22 (relating to imposition of tax) is not paid on or
before the last date prescribed for payment, interest on the
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amount at the rate established under section 806 of the
Fiscal Code shall be paid for the period from the last date
to the date paid.
(2) The last date prescribed for payment shall be
determined without regard to any extension of time for filing
the return.
(c) Interest on underpayment.--If an amount of tax required
to be withheld by an employer and paid to the department under
Subchapter A of Chapter 25 (relating to withholding tax
generally) is not paid by the due date prescribed under section
2509 (relating to payment of taxes withheld), interest on the
amount at the rate established under section 806 of the Fiscal
Code shall be paid from that date for the period of
underpayment.
§ 2814. Additions, penalties and fees.
(a) Addition for failure to file.--
(1) In the case of failure to file a return required
under this subpart on the date prescribed for filing,
determined with regard to any extension of time for filing,
unless it is shown that the failure is due to reasonable
cause and not due to willful neglect, 5% shall be added to
the amount required to be shown as tax on the return if the
failure is for not more than one month, with an additional 5%
for each additional month or fraction of a month during which
the failure continues, not to exceed 25% in the aggregate.
The amount added shall not be less than $5.
(2) The amount of tax required to be shown on the return
shall, for purposes of computing the additions for the first
month, be reduced by the amount of any part of the tax which
is paid on or before the date prescribed for payment of the
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tax and by the amount of a credit against the tax which may
be claimed on the return.
(3) The amount of tax required to be shown on the return
shall, for purposes of computing the addition for any
subsequent month, be reduced by the amount of any part of the
tax which is paid by the beginning of the subsequent month
and by the amount of a credit against the tax which may be
claimed on the return.
(b) Addition for underpayment.--
(1) If an underpayment of a tax imposed by Chapter 22
(relating to taxation generally) is due to negligence or
intentional disregard of rules and regulations, but without
intent to defraud, 5% of the amount of the underpayment shall
be added to the tax.
(2) If an underpayment of a tax imposed by Chapter 22 is
due to negligence or intentional disregard of rules and
regulations, but without intent to defraud, and the taxpayer
omits from income an amount includable in the taxpayer's
income in excess of 25% of the amount of income stated in the
return, 25% of the amount of the underpayment shall be added
to the tax.
(c) Underpayment due to fraud.--If an underpayment of tax
required under this subpart to be shown on a return is due to
fraud, 50% of the amount of the underpayment shall be added to
the tax. This amount shall be in lieu of any amount determined
under subsection (b) or (h).
(d) Underpayment of installments.--
(1) (i) If a taxpayer fails to pay all or part of an
installment of estimated tax, the taxpayer shall be
deemed to have made an underpayment of estimated tax.
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(ii) An amount shall be added to the tax for the
taxable year at the rate established under section 806 of
the Fiscal Code for the period of the underpayment but
not beyond the 15th day of the fourth month following the
close of the taxable year.
(iii) The amount of the underpayment shall be the
excess of the amount of the installment which would be
required to be paid if the estimated tax were equal to
90% of the tax, or two-thirds in the case of an
individual described in section 2602(e) (relating to
declarations of estimated tax), shown on the return for
the taxable year or, if no return was filed, of the tax
for the year, over the amount, if any, of the
installments paid on or before the last day prescribed
for payment.
(iv) No underpayment shall be deemed to exist with
respect to an installment otherwise due on or after the
taxpayer's death or, in the case of a decedent's estate
or a trust created by the decedent to receive the residue
of the decedent's estate, for a period of two years after
the decedent's death.
(2) No addition to tax shall be imposed if the total
amount of all payments of estimated tax made on or before the
last date prescribed for the payment of the installment
equals or exceeds the lesser of the following:
(i) The amount required to be paid on or before the
date if the estimated tax were an amount equal to the tax
computed after consideration of the special tax
provisions for poverty at the rates applicable to the
taxable year, but otherwise on the basis of the facts
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shown on the return for, and the law applicable to, the
preceding taxable year.
(ii) An amount equal to 90% of the tax computed, at
the rates applicable to the taxable year, on the basis of
the actual income for the months in the taxable year
ending before the month in which the installment is
required to be paid, or, in the case of a trust or
estate, an amount equal to 90% of the applicable
percentage of the tax for the taxable year as determined
under section 6654(d)(2)(C)(ii) of the Internal Revenue
Code of 1986, as amended, at rates applicable to the
taxable year computed on an annualized basis in
accordance with United States Treasury regulations, based
upon the actual income for the months of the taxable year
ending with the last day of the second preceding month
prior to the month in which the installment is required
to be paid.
(e) Penalties.--
(1) In addition to other penalties provided by law, a
person required to collect, account for and pay over a tax
imposed by this subpart who willfully fails to collect the
tax or truthfully account for and pay over the tax, or
attempts to evade or defeat a tax or the payment of a tax,
shall be liable to a penalty equal to the total amount of the
tax evaded, not collected or not accounted for and paid over.
(2) No penalty shall be imposed under subsection (b),
(c) or (h) for an offense to which this subsection is
applicable.
(3) As used in this subsection, the term "person"
includes an officer or employee of a corporation or a member
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or employee of a partnership who, as an officer, employee or
member, has a duty to collect, account for and pay over a tax
imposed by this subpart for which the violation occurs.
(f) Penalties.--
(1) A person required under the provisions of section
2504 (relating to information statement) to furnish a
statement to an employee who willfully furnishes a false or
fraudulent statement, or who willfully fails to furnish a
statement in the manner, at the time and showing the
information required under section 2504 and the regulations
prescribed under section 2504, shall for each failure be
subject to a penalty of $50 for each employee.
(2) A person required to furnish an information return
who furnishes a false or fraudulent return or who fails to
file or provide an information return shall be subject to a
penalty of $250.
(3) Each partnership, estate, trust or Pennsylvania S
corporation required to file a return with the department
under section 2702 (relating to return of Pennsylvania S
corporation) or 2707(c) (relating to requirements concerning
returns, notices, records and statements) who furnishes a
false or fraudulent return or who fails to file the return in
the manner and at the time required under section 2702 or
2707(c) shall, for each failure, be subject to a penalty of
$250.
(4) A person required to file a copy of form 1099-MISC
or 1099-NEC with the department under section 2707(f) who
willfully furnishes a false or fraudulent form or who
willfully fails to file the form in the manner, at the time
and showing the information required under section 2707(f),
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shall for each failure be subject to a penalty of $50.
(5) A person required under section 2707(f) to furnish a
copy of form 1099-MISC or 1099-NEC to a payee who willfully
furnishes a false or fraudulent form or who willfully fails
to furnish a form in the manner, at the time and showing the
information required by section 2707(f), shall for each
failure be subject to a penalty of $50.
(6) A person required to file an annual statement with
the department under section 2526 (relating to annual
withholding statement) who willfully furnishes a false or
fraudulent statement or who willfully fails to file the
statement in the manner, at the time and showing the
information required under section 2526 and the regulations
prescribed under section 2526, shall for each failure be
subject to a penalty of $50.
(7) A person required under the provisions of section
2526 to furnish an annual statement to a lessor who willfully
furnishes a false or fraudulent statement or who willfully
fails to furnish a statement in the manner, at the time and
showing the information required by section 2526 and the
regulations prescribed under section 2526, shall for each
failure be subject to a penalty of $50.
(g) Penalty for underpayment.--
(1) If an amount of tax required to be withheld by an
employer and paid over to the department under section 2509
(relating to payment of taxes withheld) or 2510 (relating to
payment of taxes withheld for nonemployer payors) is not paid
on or before the due date prescribed for filing the quarterly
return under section 2507 (relating to time for filing
withholding returns) or 2508 (relating to time for filing
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payors' returns), determined without regard to an extension
of time for filing, 5% of the amount of the underpayment
shall be added to the tax and paid to the department for each
month or fraction of a month from the due date for the period
from the due date to the date paid.
(2) The underpayment shall, for purposes of computing
the addition for a month, be reduced by the amount of the tax
that is paid by the beginning of that month.
(3) The total of the additions shall not exceed 50% of
the amount of tax required to be shown on the return reduced
by the amount of any part of the tax which is paid by the
return due date and by the amount of any credit against the
tax which may be claimed on the return.
(h) Penalty for incorrect self-assessment.--If an
individual, estate or trust files a return required under
section 2701 (relating to returns and liability) which does not
contain information on which the substantial correctness of the
self-assessment may be judged or which contains information that
on its face indicates that the self-assessment is substantially
incorrect and the self-assessment is due to a position that is
frivolous or a desire which appears on the purported return to
delay or impede the administration of Pennsylvania income tax
laws, the individual, estate or trust shall pay a penalty of
$500. The penalty imposed by this subsection shall be in
addition to any other penalty provided by law.
(i) Penalty for underpayment by partnership, association,
Pennsylvania S corporation or lessee.--
(1) If an amount of tax required to be withheld by a
partnership, association, Pennsylvania S corporation or
lessee and paid over to the department under section 2521
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(relating to general rule) or 2525 (relating to withholding
on income) is not paid on or before the date prescribed, 5%
of the amount of the underpayment shall be added to the tax
and paid to the department for each month or fraction of a
month from the due date, for the period from the due date to
the date paid.
(2) The underpayment shall, for purposes of computing
the addition for any month, be reduced by the amount of any
part of the tax which is paid by the beginning of that month.
(3) The total of the additions shall not exceed 50% of
the amount of the tax.
(j) Penalty for noncompliance.--If a tax payment is made and
the payment does not comply with section 2704.1 (relating to
electronic payment) when required, the taxpayer that is liable
for the tax shall, in addition to any other penalty, interest or
addition provided by law, be liable for a penalty of 3% of the
payment remitted, not to exceed $500.
§ 2815. Abatement of additions or penalties.
Upon the filing of a petition for reassessment or petition
for review by a taxpayer, other than an employer, as provided
under this subpart, the department may waive or abate, in whole
or in part, additions or penalties of $300 or less imposed upon
the taxpayer for a taxable year if the taxpayer has established
that the taxpayer acted in good faith with no negligence or
intent to defraud.
§ 2816. Citation authority.
(a) Penalties.--Notwithstanding any other provision of this
part, a person who does any of the following commits a summary
offense and shall, upon conviction, be subject to the fines and
penalties imposed under section 1335(a) (relating to penalties):
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(1) Does not pay withholding tax, interest or penalties
within 90 days after the due date, and the tax liability due
has not been timely appealed or subject to a duly authorized
deferred payment plan.
(2) Underpays a withholding tax, interest or penalty
within 90 days after the due date, and the tax liability due
has not been timely appealed or subject to a duly authorized
deferred payment plan.
(3) Fails to file a tax withholding return, report or
other reporting document within 90 days after the due date of
the applicable payment or return, report or other reporting
document.
(b) Additional penalties.--The penalties imposed under this
section shall be in addition to other penalties imposed under
this subpart.
(c) Enforcement.--The secretary may designate employees of
the department to enforce this section. Employees shall exhibit
proof of and be within the scope of the designation when
instituting proceedings as provided under the Pennsylvania Rules
of Criminal Procedure.
§ 2817. Crimes.
(a) Evasion, defeat or nonpayment of tax.--A person who
willfully attempts in any manner to evade or defeat a tax
imposed by this subpart or the payment of a tax, in addition to
other penalties provided by law, commits a misdemeanor and
shall, upon conviction, be sentenced to pay a fine not exceeding
$25,000 or to imprisonment not exceeding two years, or both.
(b) Failure to collect tax.--A person required under this
subpart to collect, account for and pay over a tax imposed by
this subpart who willfully fails to collect or truthfully
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account for and pay over the tax, in addition to other penalties
provided by law, commits a misdemeanor and shall, upon
conviction, be sentenced to pay a fine not exceeding $25,000 or
to imprisonment not exceeding two years, or both.
(c) Failure to supply records or information.--A person
required under this subpart to pay a tax, make a return, keep
records or supply information who willfully fails to pay the
tax, make the return, keep records or supply information at the
time required by law or regulations, in addition to other
penalties provided by law, commits a misdemeanor and shall, upon
conviction, be sentenced to pay a fine not exceeding $5,000 or
to imprisonment not exceeding two years, or both.
(d) False statements or claims.--A person who willfully
makes and subscribes a return, statement or other document that
is verified by a written declaration to be made under the
penalties of perjury and which the person does not believe to be
true and correct as to every material matter, or willfully aids
or assists in, procures, counsels or advises the preparation or
presentation of a return, affidavit, claim or other document
which is fraudulent or is false as to a material matter, whether
or not the falsity or fraud is with the knowledge or consent of
the person authorized or required to present the return,
affidavit, claim or document, commits a misdemeanor and shall,
upon conviction, be sentenced to pay a fine not exceeding $5,000
or to imprisonment not exceeding two years, or both.
(e) Fraudulent information.--A person who willfully delivers
or discloses to the department a list, return, account,
statement or other document known by the person to be fraudulent
or false as to a material matter commits a misdemeanor and
shall, upon conviction, be sentenced to pay a fine not exceeding
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$5,000 or to imprisonment not exceeding two years, or both.
(f) Disclosure of information.--
(1) It shall be unlawful for an officer, agent or
employee of the Commonwealth to divulge or make known in any
manner not provided by law, except for official purposes, to
any person the amount or source of income, profits, losses,
expenditures or other information disclosed in a return, or
to permit a return or copy of a return or a book containing
an abstract or other information to be seen or examined by a
person except as provided by law.
(2) It shall be unlawful for a person to print or
publish in any manner not provided by law, a return, part of
a return, source of income, profits, losses or expenditures
appearing in a return.
(3) A person who violates paragraph (1) or (2) commits a
misdemeanor and shall, upon conviction, be sentenced to pay a
fine not exceeding $1,000 or to imprisonment not exceeding
one year, or both, together with the costs of prosecution. If
the offender is an officer or employee of the Commonwealth,
the offender shall be dismissed from office or discharged
from employment.
(g) Disclosure of information to court.--
(1) Notwithstanding subsection (f), it shall be lawful
for an officer or employee of the Commonwealth having custody
of returns to produce the returns or evidence of information
contained in the returns in an action or proceeding in any
court on behalf of the department under the provisions of
this subpart to which the department is a party, or on behalf
of a party to an action or proceeding under the provisions of
this subpart when the returns or facts shown are directly
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involved in the action or proceeding where the court requires
the production of and may admit into evidence the returns or
the facts shown by the returns as are pertinent to the action
or proceeding and no more.
(2) Nothing in this section shall be construed to
prohibit any of the following:
(i) The delivery to a taxpayer or the taxpayer's
duly authorized representative of a certified copy of a
return filed in connection with the taxpayer's tax.
(ii) The publication of statistics classified to
prevent the identification of particular returns and the
items of the returns.
(iii) The inspection by the Attorney General or
other legal representatives of the Commonwealth of the
return of a taxpayer who shall bring action to review the
tax based on the return or against whom an action or
proceeding has been instituted for the collection or
recovery of the tax imposed by this subpart.
(iv) The delivery to the Pennsylvania Higher
Education Assistance Agency of a certified copy or
extract of a State income tax return requested by the
agency for use in determining the eligibility of
applicants for State grants, if the executive director of
the agency certifies that the agency has in the agency's
possession a statement signed by the applicant and the
applicant's parent, parents, guardian or guardians
authorizing the agency to obtain a certified copy or
extract of a State income tax return from the director of
the State Income Tax Bureau.
§ 2818. Rules and regulations.
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The department shall enforce the provisions of this subpart
and shall prescribe, adopt, promulgate and enforce rules and
regulations relating to any matter or thing pertaining to the
administration and enforcement of the provisions of this subpart
and the collection of taxes imposed by this subpart.
§ 2819. Examination.
(a) Examination of records.--The department, or an agent
authorized in writing by the department, may examine the books,
papers and records of a taxpayer or supposed taxpayer and
require the production of a copy of the taxpayer's return as
made to and filed with the Federal Government, if one was made
and filed, in order to verify the accuracy of a return made or,
if no return was made, to ascertain and assess the tax imposed
by this subpart.
(b) Taxpayer to provide access.--Each taxpayer or supposed
taxpayer is directed and required to give to the department or
the department's duly authorized agent the means, facilities and
opportunity for examinations and investigations as are provided
and authorized.
(c) Inquisitorial powers.--The department shall examine a
person under oath concerning income which was or should have
been returned for taxation, and may compel the production of
books, papers and records and the attendance of all persons,
whether as parties or witnesses, whom the department believes
have knowledge of the income. The procedure for the hearing or
examination shall be the same as that provided by the Fiscal
Code relating to inquisitorial powers of fiscal officers.
§ 2820. Cooperation with other governmental agencies.
(a) Inspection of returns.--
(1) Notwithstanding the provisions of section 2817(f)
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(relating to crimes), the department may:
(i) permit the United States Commissioner of
Internal Revenue, the proper officer of a political
subdivision of this Commonwealth or any other state
imposing tax based upon the incomes of individuals or the
authorized representative of an officer to inspect the
tax returns of a taxpayer; or
(ii) furnish to the officer or the officer's
authorized representative an abstract of the return of
income of a taxpayer or supply to the officer or the
officer's authorized representative information
concerning an item of income contained in a return of a
taxpayer.
(2) (i) Permission shall be granted or information
furnished to an officer or the officer's representative
only if the statutes of the United States or another
state grant substantially similar privileges to the
proper officer of this Commonwealth charged with the
administration of the personal income tax law of this
Commonwealth.
(ii) An officer or authorized agent of a county
imposing a personal property tax shall be furnished the
following information from the returns upon payment to
the department of the cost of collecting and reproducing
the requested information:
(A) The name, address and Social Security number
of the taxpayer.
(B) If the taxpayer has reported dividends or
interest.
(b) Reciprocal agreements.--
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(1) The department may enter into an agreement with the
taxing authorities of a state which imposes a tax on or
measured by income to provide that compensation paid in the
state to residents of this Commonwealth shall be exempt from
the tax.
(2) Compensation paid in this Commonwealth to residents
of another state shall be exempt from Pennsylvania personal
income tax.
(3) The department, in the agreements, may provide for
reciprocal withholding, employer liability, exchange of
information and all other matters relating to cooperation
between the states.
§ 2821. Appropriation for refunds.
As much of the proceeds of the tax imposed by this subpart as
shall be necessary for the payment of refunds, enforcement or
administration under this subpart is appropriated for those
purposes.
CHAPTER 29
MISCELLANEOUS PROVISIONS
Sec.
2901. Constitutional construction.
2902. Saving clause and limitations.
2903. Transfer to Clean Streams Fund.
2904. Applicability.
§ 2901. Constitutional construction.
In addition to the provisions relating to legislative intent
under section 2203(i) (relating to classes of income), if a
word, phrase, clause, sentence, section or provision of this
subpart is for any reason held to be unconstitutional, the
decision of the court shall not affect or impair any of the
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remaining provisions of this subpart. It is declared as the
legislative intent that this subpart would have been adopted had
the unconstitutional word, phrase, clause, sentence, section or
provision of this subpart not been included in this subpart.
§ 2902. Saving clause and limitations.
(a) General rule.--Except as provided in subsection (b),
notwithstanding any other provision of law, including any
provision of the act of August 5, 1932 (Sp.Sess., P.L.45,
No.45), referred to as the Sterling Act, the validity of an
ordinance, part of an ordinance, a resolution or part of a
resolution, including an amendment or supplement to the
ordinance, part of the ordinance, resolution or part of the
resolution enacted before, on or after the effective date of
this section or adopted by a political subdivision of this
Commonwealth for or relating to the imposition, levy or
collection of a tax, shall not be affected or impaired by
anything contained in this subpart.
(b) Exceptions.--
(1) Notwithstanding subsection (a), a rate of tax
imposed by ordinance of a city of the first class under the
Sterling Act on salaries, wages, commissions, compensation or
other income received or to be received for work done or
services performed within the city by persons who are not
legal residents of the city, shall not, except as otherwise
provided in this section, exceed the tax imposition rate of
4.3125% for the tax year 1977 or for any tax year thereafter.
(2) If a city under paragraph (1) by ordinance imposes a
tax rate on residents or nonresidents in excess of the tax
rate under paragraph (1) on the income categories enumerated
in this subpart:
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(i) The provisions of the ordinance imposing the tax
rate increase on income of persons who are legal
residents of the city shall be deemed valid and legally
effective within the meaning and application of
subsection (a).
(ii) The provisions of the ordinance imposing a tax
rate in excess of 4.3125% with respect to persons who are
not legal residents of the city shall be deemed suspended
and without validity to the extent that the tax rate
exceeds the 4.3125% on income of the nonresidents. The
excess tax rate provisions shall remain suspended and
without validity until the date on which the city by
ordinance imposes a rate of tax on income of both legal
residents or nonresidents of the city in excess of the
tax rate imposition of 5.75% per year. In that case, the
General Assembly declares the suspension to be removed
and the tax rate valid as to nonresidents, provided that
the suspension is removed and the rate deemed valid only
to the extent the tax rate imposed on income of the
nonresidents does not exceed 75% of the tax rate imposed
by ordinance per year on the income of legal residents of
the city. It is the intention of the General Assembly by
this subsection to impose certain terms and conditions
with respect to the validity and legal effectiveness of
the Sterling Act or an ordinance of the city of the first
class enacted under the Sterling Act which imposes a tax
on the income of nonresidents of the city.
(3) Notwithstanding the suspension provisions under this
section, each city of the first class which imposes a tax
under the Sterling Act shall by ordinance direct every
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employer maintaining an office or transacting business within
the city and making payment of compensation to a resident
individual or nonresident individual taxpayer performing
services on behalf of the employer within the city to deduct
and withhold from the compensation for each payroll period a
tax computed in a manner as to result, so far as practicable,
in withholding from the employee's compensation during each
calendar year an amount substantially equivalent to the tax
reasonably estimated to be due for that year with respect to
the compensation. The method of determining the amount to be
withheld shall be to withhold the highest amount of tax
imposed with provision in the ordinance to provide refunds of
the excess tax withheld to qualified nonresident taxpayers
within four months of the end of each calendar year.
(4) If all or part of the provisions of subsection (b)
are declared by a court to be unconstitutional, it shall be
the duty of the court to construe the remaining provisions of
this subpart in accordance with section 2901 (relating to
constitutional construction).
(c) Revenue commissioner, deductions and payments.--
(1) Each employer having a place of business within this
Commonwealth who employs one or more persons who are
residents of a city of the first class shall:
(i) within 30 days after becoming such an employer,
register with the revenue commissioner of a city of the
first class the employer's name and address and other
information as the revenue commissioner may require; and
(ii) at the time of payment to the employee, deduct
from the salary, wages, commissions or compensation due
the employee the tax imposed by the city of the first
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class on any salary, wage, commission or other
compensation due the employee.
(2) An employer required to withhold taxes under this
subsection shall calculate the amount of salary, wages,
commissions and compensation of each employee as determined
under the classes of income under section 2203 (relating to
classes of income).
(3) Each employer employing one or more persons who are
residents of a city of the first class who pay a tax imposed
under this subpart shall file a return and pay to the revenue
commissioner the amount of taxes deducted as provided under
paragraph (2). The following shall apply:
(i) The return shall be on a form furnished by the
revenue commissioner.
(ii) The return shall specify the following:
(A) The names and residences of each employee of
that employer during all or any part of the period
covered by the return.
(B) The amounts of salaries, wages, commissions
or other compensation earned during the period by
each employee.
(C) Other information as the revenue
commissioner may require.
(4) The employer shall remit the return and the total
tax deducted in accordance with time frames established under
section 2509 (relating to payment of taxes withheld).
(5) Annually, on or before the 28th day of February,
each employer who has filed returns of tax withheld and
remitted the tax through the year shall be required to file
an Employer's Annual Reconciliation of Wage Tax Withheld,
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along with a copy of Form W-2 of the Internal Revenue Service
for each employee, other listings or electronic data
processing tapes, setting forth the following information:
(i) The name and address of the employer.
(ii) The employer's Federal identification number.
(iii) The full name and residence address of each
employee.
(iv) The employee's Social Security number.
(v) The total wages paid during the year before any
deductions.
(vi) The employer's city account number.
(6) Employers or their designated agents required to
file with the revenue commissioner under this subsection
shall not be required by the revenue commissioner to be
bonded. Employer liability for taxes withheld under this
subsection shall be the same as provided in sections 2511
(relating to liability for withheld taxes) and 2513 (relating
to failure to withhold).
(7) If an employer fails to deduct and withhold tax as
prescribed in this subsection, it shall not relieve the
employee from payment of the tax where payment cannot, for
any reason, be obtained from the employer.
§ 2903. Transfer to Clean Streams Fund.
No later than August 1, 2024, and each August 1 thereafter,
the sum of $50,000,000 shall be transferred from the proceeds of
the tax imposed under this subpart to the Clean Streams Fund
established under section 1712-A.2 of the Fiscal Code.
§ 2904. Applicability.
(a) General rule.--The tax under this subpart shall first
apply and be imposed upon income received by or accrued to a
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taxpayer on and after June 1, 1971.
(b) Exception.--A taxpayer who filed returns on the basis of
a fiscal year or who is the beneficiary of an estate or trust or
member of a partnership which files its returns under this
subpart on the basis of a fiscal year shall be subject to tax
for the first taxable period on the portion of the fiscal year
or of the fiscal year of the estate, trust or partnership which
postdates May 31, 1971, as prescribed by the department by
regulations.
(c) Additions or penalties.--Section 2814 (relating to
additions, penalties and fees), which provides for additions or
penalties to the tax, shall not take effect until March 20,
1972.
Section 3. Repeals are as follows:
(1) The General Assembly declares that the repeals under
paragraph (2) are necessary to effectuate the addition of 53
Pa.C.S. Ch. 90.
(2) The following are repealed:
(i) Section 1730-E(a) and (b) of the act of April 9,
1929 (P.L.343, No.176), known as The Fiscal Code.
(ii) Section 3171-B(a)(4)(ii) and (iii) and (b)(2)
of the act of July 28, 1953 (P.L.723, No.230), known as
the Second Class County Code.
(iii) Chapter 13 of the act of June 27, 2006 (1st
Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief
Act.
(3) The General Assembly declares that the repeal under
paragraph (4) is necessary to effectuate the addition of 53
Pa.C.S. Ch. 90A Subch. F.
(4) Section 688 of the act of March 10, 1949 (P.L.30,
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No.14), known as the Public School Code of 1949, is repealed.
(5) The General Assembly declares that the repeal under
paragraph (6) is necessary to effectuate the addition of 72
Pa.C.S. Pt. II Subpt. A.
(6) Article II of the act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971, is repealed.
(7) The General Assembly declares that the repeal under
paragraph (8) is necessary to effectuate the addition of 72
Pa.C.S. Pt. II Subpt. B.
(8) Article III of the act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971, is repealed.
(9) The following acts and parts of acts are repealed
insofar as they are inconsistent with this act:
(i) Except as provided under paragraph (4), any
provision of the act of March 10, 1949 (P.L.30, No.14),
known as the Public School Code of 1949, and of any other
law relating to the authority of a school district to
levy, assess and collect a tax on real property and the
power of a city of the first class to levy, assess and
collect a tax on real property.
(ii) Any provision of the act of August 9, 1963
(P.L.643, No.341), known as the First Class City Public
Education Home Rule Act, and any home rule school
district charter adopted under the First Class City
Public Education Home Rule Act.
(iii) Except as provided under paragraph (2)(iii),
any provision of the act of June 27, 2006 (1st Sp.Sess.,
P.L.1873, No.1), known as the Taxpayer Relief Act.
(10) All acts and parts of acts that are inconsistent
with this act are repealed to the extent of the
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inconsistency.
Section 4. The addition of 72 Pa.C.S. Pt. II Subpt. A is a
continuation of Article II of the act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971. The following
apply:
(1) Except as otherwise provided in 72 Pa.C.S. Pt. II
Subpt. A, all activities initiated under Article II of the
Tax Reform Code of 1971 shall continue and remain in full
force and effect and may be completed under 72 Pa.C.S. Pt. II
Subpt. A. Orders, regulations, rules and decisions which were
made under Article II of the Tax Reform Code of 1971 and
which are in effect on the effective date of section 3(6) of
this act shall remain in full force and effect until revoked,
vacated or modified under 72 Pa.C.S. Pt. II Subpt. A.
Contracts, obligations and collective bargaining agreements
entered into under Article II of the Tax Reform Code of 1971
are not affected nor impaired by the repeal of Article II of
the Tax Reform Code of 1971.
(2) Except as set forth in paragraph (3), any difference
in language between 72 Pa.C.S. Pt. II Subpt. A and Article II
of the Tax Reform Code of 1971 is intended only to conform to
the style of the Pennsylvania Consolidated Statutes and is
not intended to change or affect the legislative intent,
judicial construction or administration and implementation of
Article II of the Tax Reform Code of 1971.
(3) Paragraph (2) does not apply to the addition of 72
Pa.C.S. § 1358.
Section 5. The addition of 72 Pa.C.S. Pt. II Subpt. B is a
continuation of Article III of the act of March 4, 1971 (P.L.6,
No.2), known as the Tax Reform Code of 1971. The following
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apply:
(1) Except as otherwise provided in 72 Pa.C.S. Pt. II
Subpt. B, all activities initiated under Article III of the
Tax Reform Code of 1971 shall continue and remain in full
force and effect and may be completed under 72 Pa.C.S. Pt. II
Subpt. B. Orders, regulations, rules and decisions which were
made under Article III of the Tax Reform Code of 1971 and
which are in effect on the effective date of section 3(8) of
this act shall remain in full force and effect until revoked,
vacated or modified under 72 Pa.C.S. Pt. II Subpt. B.
Contracts, obligations and collective bargaining agreements
entered into under Article III of the Tax Reform Code of 1971
are not affected nor impaired by the repeal of Article III of
the Tax Reform Code of 1971.
(2) Except as set forth in paragraph (3), any difference
in language between 72 Pa.C.S. Pt. II Subpt. B and Article
III of the Tax Reform Code of 1971 is intended only to
conform to the style of the Pennsylvania Consolidated
Statutes and is not intended to change or affect the
legislative intent, judicial construction or administration
and implementation of Article III of the Tax Reform Code of
1971.
(3) Paragraph (2) does not apply to the following:
(i) The addition of the definition of
"compensation," "poverty income" and "Social Security
substitute pension" under 72 Pa.C.S. § 2102.
(ii) The addition of 72 Pa.C.S. § 2203(a)(1)(i)(F).
Section 6. Repeals are applicable as follows:
(1) The repeals under section 3 of this act, insofar as
they relate to the prohibition on the levy, assessment or
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collection of real property taxes under 53 Pa.C.S. § 9011 by
school districts which use a January to December fiscal year,
shall apply beginning January 1, 2028.
(2) The repeals under section 3 of this act, insofar as
they relate to the prohibition on the levy, assessment or
collection of real property taxes under 53 Pa.C.S. § 9011 by
school districts which use a July to June fiscal year, shall
apply beginning July 1, 2028.
Section 7. This act shall take effect as follows:
(1) The following provisions shall take effect October
1, 2027:
The addition of 72 Pa.C.S. Pt. II.
Section 3(6) and (8) of this act.
(2) Except as provided in paragraph (1)(ii), section 3
of this act shall take effect January 1, 2028.
(3) The remainder of this act shall take effect
immediately.
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